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05 Jan 2021, 12:51
Charlotte Nijhuis

Wholesale power prices in Germany dropped significantly in 2020 – study

Clean Energy Wire

Wholesale electricity prices in Germany dropped significantly in 2020 compared to the year before, according to an analysis by the Institute of Energy Economics (EWI) at the University of Cologne. At 30.47 euros per megawatt hour (MWh), the average wholesale price was more than seven euros lower than in 2019. Three main factors are responsible for this: lower fuel costs, the slump in electricity demand as a result of the pandemic, and the record amount of electricity generated from renewable sources.

The measurements implemented to fight the coronavirus pandemic and the subsequent global decline in economic output have caused a drop in energy demand. In addition, the prices of coal and gas have dwindled in 2020, EWI found. However, according to the study’s authors, the pandemic is not the cause but the catalyst of this development. Gas prices were already under pressure in 2019 due to large supplies, and dropped further in 2020. “Gas-and-steam combined cycle power plants benefited from low gas prices and were even able to move ahead of lignite-fired power plants in the merit order at times,” says Simon Schulte, manager at EWI. At the same time, favourable weather conditions and the expansion of generation capacity allowed for an increase in electricity generation from renewables of about 9.2 terawatt hours, which also had a dampening effect on electricity prices in 2020, according to the study.

Power consumers do not just pay the wholesale price, but according to their provider's conditions. In addition, there are many taxes and levies. These can make up three quarters and more of the final price per kilowatt hour used in German households.

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