Energy Transition

Electricity Prices in Free Fall

Sonnenaufgang im Morgennebel
Energy company managers are scrambling to keep up with plummeting prices.
  • Why it matters

    Why it matters

    Germany’s move to sustainable power sources has been an ecological success, but an economic disaster for the electricity market.

  • Facts

    Facts

    • The price of electricity on the wholesale market has been dropping for five years, reaching a catastrophic level for conventional power plant operators.
    • It has plunged from €60 ($67.37) per megawatt-hour to €20.
    • At current prices, energy companies’ plans to restructure to accommodate the energy transition are now in danger, and they are looking to the government for help.
  • Audio

    Audio

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Germany’s switch to renewable energy sources is a success story. Ever since the country dedicated itself to a transformation of its energy supply following Japan’s Fukushima nuclear disaster five years ago, renewables have been booming. Last year, they accounted for a third of the energy consumed in Germany.

But while this success goes far in protecting the climate and environment, it has an economic downside. The electricity market has come apart at the seams.

While wind and solar electricity are being fed into the grid at set prices on a priority basis, natural gas- and coal-fired power plants, and soon nuclear power plants, are being forced off the market.

The price of electricity on the wholesale market has been in freefall for five years, plunging from €60 ($67.37) per megawatt-hour to the current €20.

The situation poses an existential threat for German operators of conventional plants like E.ON and RWE.

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