PA’s Marcel Muenz, an energy expert, is quoted in an article in ICIS Energy discussing Germany’s nuclear phase-out.
The article looks at the German wholesale power prices and their potential increase from 2020 due to the country’s high-profile nuclear phase-out and its carbon market reform. Forecasts by ICIS suggest a slight year-on-year increase in 2020 and 2021 after prices drop to €27.03/MWh for a 2019 delivery.
Drawing on market modelling by PA Consulting Group, Marcel says: “Power prices will start to slightly increase already 2019 and accelerate in the early 2020s to around the level we saw in the early 2010s”.
The article explains Germany has approved the phase-out of nuclear power by the end of 2022. It plans to close one nuclear reactor by the end of this year, another by the end of 2019, three more in 2021 and the remaining three in 2022 – a 11GW capacity reduction in total.
In addition, reform of the European carbon trading system should support carbon values and, by extension, power prices towards the end of the decade. Fossil-fuelled power plants in Europe must hold carbon certificates to cover their emissions.
Marcel goes on to say: “Further upward pressure will also come from lignite plants going offline”. Germany has approved a gradual transferral of 2.7GW of lignite-fired capacity into a reserve between 2016 and 2019, and will follow with the plants’ eventual closure to reduce emissions.