Germany's power prices could rise significantly due to coal exit – consultancy

The German coal exit could lead to a “strong increase” in wholesale power prices, unless the framework conditions in the energy sector are adapted quickly, said consultancy Oliver Wyman. Prices could rise from about 40 euros per megawatt hour (MWh) in 2018 to 65 euros/MWh by 2022, according to the analysis. In addition, the risk of supply shortfalls is growing as better projectable coal-fired and nuclear power plants are taken out of the pool, wrote Oliver Wyman, and called for new gas plant capacities and storage solutions. “From a purely economically rational perspective, we now need to experience a renaissance of gas-fired power plants,” said Thomas Fritz, partner at the consultancy. He cautioned that acceptance of gas plants among the population could become an issue, as natural gas is a fossil fuel.

A recent study by energy think tank Agora Energiewende* found that the coal phase-out would have "very little" impact on electricity prices. The wholesale power price makes up only a small share of the price per kilowatt hour households pay in the end. The German government has said it will implement the phase-out of coal by 2038 as proposed by the coal exit commission at the beginning of the year.

*Like the Clean Energy Wire, Agora Energiewende is a project funded by Stiftung Mercator and the European Climate Foundation.