Coal exit will have minor effect on power prices – German study

Wholesale power prices could rise by about €0.004/kWh by 2030 if coal and lignite are to be reduced to 17GW

An exit from coal and lignite will have a manageable impact on power prices in Germany, the renown Öko-Institut says in a new study.

Wholesale power prices could rise by only about €0.004 per kilowatt hour on average if at the same time renewable energies increase their share in the country’s power mix to 65% by 2030 as targeted by the government, the institute says in its study on the “Power price and cost effects of an orderly exit from coal generation.”

“The coal commission has proposed a compensation for rising power prices for all German power consumers,” said Felix Matthes, research coordinator for energy and climate policy at the Öko-Institut.

“The federal government should decide about the level of those compensation payments against the background of highly volatile fuel prices.”

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The study comes as the government is preparing measures to enact proposals made by the so-called coal commission in January, which suggested a phase-out of coal and lignite generation in Europe’s largest economy by 2038.

German utility RWE, a major coal and lignite power producer, has said 2038 is too early, and chief executive Martin Rolf Schmitz today again has demanded billions in compensation for ending lignite mining and switching off coal power plants.

German public opinion, by contrast, is in favour of a quicker coal exit and is mostly supporting the FridaysForFuture movement by striking school students that demand faster climate action.

By how much power prices will rise from a coal phase-out will also depend on the development of natural gas and CO2 prices, the Öko-Institute added.

The study took 2030 as a focal year, as by then Germany’s lignite and coal capacity according to the coal exit commission is supposed to be reduced to 17GW, from an installed capacity of 43GW at the end of 2017.

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