Planned renewables expansion lowers electricity prices regardless of changes in demand - report

The currently planned expansion of wind and solar energy by 2030 in Germany will lead to lower electricity prices regardless of changes in demand in the same time period, found a report drafted by consulting firm Aurora Energy Research and commissioned by energy think tank Agora Energiewende.

If the current rate of expansion continues, the average wholesale electricity price will be around 20 euros per megawatt-hour lower than if expansion slows - in both scenarios with lower and stronger demand development, said the report. However, a slowdown in the expansion of renewable energies would bring higher prices for all electricity customers and jeopardise further electrification in industry, transport and the building sector, the report found.

Electricity demand in Germany is growing slower than expected, due to lagging electrification in key sectors like mobility and heating. This has sparked a debate over whether to slow down the buildout of renewable energies as well. The new government has said it aims to re-assess by summer 2025 the country's future electricity demand, the status of energy security, grid expansion, renewables expansion, digitalisation, and the hydrogen ramp-up as a basis for further plans. Economy and climate minister, Katherina Reiche from the CDU, has called for a “reality check” of the costs and risks of renewables.

The heads of the northern German states have recently called on the government to swiftly implement measures to reduce electricity costs. However, the new government’s plan to introduce a subsidised electricity price for industry could be scuppered by European law.