EON SE Utilities such as RWE (>> RWE AG) and E.ON (>> E.ON SE) desperately want government help through the creation of a "capacity market" to fund their otherwise unprofitable gas and coal-fired plants, saying they can guarantee supply and avert blackouts when there is a lull in variable wind or solar energy.
But Merkel, addressing a reception of the German Renewable Energy Federation (BFE) of wind and solar producers on Wednesday night said: "I share your scepticism as regards to capacity markets. We want the most efficient solution."
Merkel said she acknowledged the thermal plant producers' concerns but this could not mean helping plants with high CO2 emissions survive under Germany's climate protection targets. Her political course away from fossil fuels-based towards green energy is backed by a majority of voters.
The fact that Merkel signalled her views to a green caucus is significant after her Economy and Energy Minister Sigmar Gabriel snubbed the conventional energy lobby this week by cancelling his appearance at the high-profile Handelsblatt energy conference next week in Berlin.
The government is working towards a way to safeguard permanent electricity supply, with cash for loss-making plants at one end of the spectrum of possible solutions and letting markets decide with price spikes in low supply periods the other.
Utilities argue the latter solution could cause more mass closures and leave the market under-invested too long. Some sort of reserve mechanism seems to be an evolving compromise.
Merkel also said that building planned power transmission lines to transport wind power produced in Germany's north to the industrial south and west had a high priority, despite protests by locals who do not want new infrastructure nearby.
(Reporting by Markus Wacket, writing by Vera Eckert, editing by William Hardy)
