Delay in gas power plant buildout could lead to new short-term power price spikes in Germany – media
Handelsblatt
Energy sector experts as well as industry representatives have warned that a shortage of constantly available electricity capacity could lead to new short-lived but sometimes extreme price spikes on the electricity exchange, business daily Handelsblatt reported.
Especially during periods of reduced renewable power production when there is little wind and sunshine, also known as dark doldrums (Dunkelflaute), the price of electricity on the wholesale power market can see hours of extreme hikes. For example, in mid-December 2024, Germany was forced to fire up its fossil fuel plant fleet and had to purchase electricity from abroad to cover its demand as a result of the low renewable power output, leading to wholesale prices in intraday trading near the 1,000 euros per megawatt hour mark.
"An accumulation of price peaks and a growing dependence on electricity imports are the inevitable consequence of the progressive shortage of secure capacities," Christof Bauer, professor of energy economics at the Technical University of Darmstadt, told Handelsblatt. "The secured power plant capacities available on the market fell by more than 13 gigawatts by the end of 2024 compared to the end of 2022
Power plants that can supply electricity at any time, also called controllable capacity and which includes coal or gas power plants, are needed for times when renewables output is low. Germany has been building out renewable capacity while steadily decommissioning coal plants and has phased out its nuclear plant fleet as part of the energy transition.
To provide backup capacity for these Dunkelflaute periods, the outgoing German government had proposed to put replacement hydrogen-ready gas power plants to tender as part of its Power Plant Security Strategy. However, the breakup of the coalition government meant the plans ultimately fell through.
"The price spikes during the dark doldrums are a sign of system errors," Matthias Belitz, energy expert at the German Chemical Industry Association (VCI), told Handelsblatt. "Until these have been reliably rectified, we should explore all options to minimise them."
Bauer called for existing reserve power plants to be connected to the grid each winter in the coming years. These "grid reserve" plants have a combined capacity of 9.9 GW, Handelsblatt reported. According to Christian Seyfert, head of the Association of Industrial Energy Consumers (VIK), it should be possible for these plants to be used to dampen price peaks, particularly during winter.
Dunkelflaute periods have also affected some of Germany’s neighbours: as the country increases electricity imports, reserves in neighbouring countries are ramped up, increasing power prices there too. While power plants abroad might profit from selling power to Germany at higher prices, energy-intensive companies in the country are aggrieved, Bauer said. Swedish energy minister Ebba Busch had already complained.
Auctions for Germany's new H2-ready gas power plants were supposed to commence in the first half of 2025, with the first plants scheduled to be operational by 2030. However, these targets move increasingly out of reach.
