Influence of Renewable Energies on the Electricity Market in Germany

The elec­tri­city markets in Germany have deve­lo­ped in a direc­tion that was quite unex­pec­ted for many: rene­wa­ble ener­gies are lowe­ring elec­tri­city prices! — On average this year, 12-month EEX whole­sale prices for both base and peak load power have decli­ned. Peak load in parti­cu­lar has come under pres­sure due to the strong expan­sion of photo­vol­taics. In combi­na­tion with rising gas prices, this has even resul­ted in gas-fired power plants’ gross margins for the 12-month contract for base load being nega­tive for almost 12 months now. Even for peak power, gas-fired power plants were not able to gene­rate a posi­tive gross margin on a monthly basis this year. The reason: the margi­nal cost of produ­cing rene­wa­ble energy is almost zero, since wind and solar are free. The gas-fired power plant, on the other hand, has to pay for every cubic meter of gas. This deve­lo­p­ment was favored by the excep­tio­nally good weather in 2011. Clear skies have led to extre­mely favorable condi­ti­ons for photo­vol­taic instal­la­ti­ons, resul­ting in unusually high PV energy yields.

The appeal of rene­wa­ble energy is its low opera­tio­nal cost. Once instal­led, they produce almost for free (except for small main­ten­ance costs). Now the share of rene­wa­ble ener­gies in Germany has reached almost 25%. PV and wind are slowly beco­ming the price-deter­mi­ning form of elec­tri­city. — This posi­tive impulse from rene­wa­ble ener­gies on whole­sale elec­tri­city prices was not expec­ted by market parti­ci­pants in this way. Rather, that market prices would rise shar­ply after the German reac­tors shut down. — Howe­ver, the oppo­site has occur­red: the grid has not collap­sed and whole­sale elec­tri­city prices are falling due to the influence of rene­wa­ble energy.

In recent years, the cost of elec­tri­city for the end consu­mer has risen shar­ply due to the EEG costs. This increase is now expec­ted to flat­ten out and settle at about the level of infla­tion — for 2012, the increase in EEG costs was set at about 3.5%.

In the short term, the low elec­tri­city prices on the EEX mean that no new gas-fired power plants will be built. In the long run, the low opera­tio­nal costs of wind and solar power lead to a grea­ter distinc­tion between consump­tion and capa­city costs. The pricing mecha­nism will be more capa­city-based. — It is possi­ble that in a few years a simi­lar situa­tion will occur as in mobile commu­ni­ca­ti­ons: I pay monthly for the provi­sion of band­width — i.e. capa­city — and receive a certain amount of consump­tion for free, for exam­ple 2,000 free call minu­tes per month will corre­spond to a certain amount of kWh consump­tion that can be used for free.

I expect this deve­lo­p­ment to streng­then Germany’s compe­ti­tive posi­tion. Germany is also a leader in energy policy: higher energy prices in the short term have led to effi­ci­ency measu­res. In the longer term, energy prices will stabi­lize because the opera­tio­nal costs of produ­cing elec­tri­city will increase less than if an economy relies on gas, coal, oil, or nuclear