Electricity Prices Fall In Europe As German Renewable Energy Output Increases

For the fifth consecutive month, electricity prices in countries neighboring Germany have decreased, recently released Platts data reveals, due in large part to increased solar and wind generation in Germany.

The Platts Continental Power Index (CONT), described as a “demand-weighted base load average of day-ahead contracts assessed in Germany, Switzerland, France, Belgium and the Netherlands,” dropped steadily in early 2014. The index decreased to €35.06 (or about $48.50) per megawatt hour in March, an 18 percent drop from February. Overall, the index is down by more than 39 percent since peaking at €50.50/MWh in November of last year.

"A mid-March surge in German wind output followed seven days of peak solar output, which rose above 20 gigawatts (GW) to a new monthly record of 23 GW on March 20," Andreas Franke, Platts managing editor of European power and gas said in a news release.

"German power prices for March 16 delivery turned negative as wind power output rose above 24 GW combined with stronger solar production," Franke continued. "Further along the curve, German year-ahead power prices fell below €34/MWh in March for the first time in more than nine years as the price CO2 fell drastically and coal prices retreated."

Germany currently gets about 25 percent of its electricity from renewable energy, and the goal is to increase that number to at least 80 percent by 2050. German wind and solar output for the first three months of 2014 increased by 40 percent -- or 6.5 terawatt-hours -- compared with last year, according to the Platts data. Wind power increased 31 percent from the first quarter of 2013, while solar power increased 74 percent from more than a year earlier. Germany’s combined wind and solar portfolio is more than 70 gigawatts, making them the country’s largest sources of power when measured by installed capacity.

Data for the past three years from the Fraunhofer Institute shows that wind and solar power generation increased, while energy generation from natural gas fired power plants decreased significantly. Solar and wind power generation in Germany in 2013 increased by 36 percent in export surplus from 2012 levels. Photovoltaic power also increased by 44 percent from 2011 to 2012.

Reuters reported last week that German Chancellor Angela Merkel’s cabinet approved a reform measure for the country’s renewable energy law. The reform measure “will slow the growth of green energy...and force new investors in green power to take some risk,” according to Reuters. The German government wants to keep electricity affordable while allowing the renewable energy sector to grow. And growth in renewables is something that the government wants. Under the reform measure, the government wants to increase renewable energy generation to 40 to 45 percent of total electricity production by 2025 and 55 to 60 percent by 2035.

Image credit: Martin Abegglen