It's been a good year since Germany's last three nuclear power plants were closed: Neckarwestheim 2, Emsland and Isar 2. But the debate over phasing out nuclear power hasn't stopped at all. A key point of discussion is the impact on the electricity market.

Germany after nuclear elimination

As part of a study commissioned by the energy supplier Green Planet Energy and the environmental protection organization Greenpeace, the energy management consultancy enervis took stock. The objective of the analysis was to examine the evolution of the electricity market since the phase-out of nuclear energy. To this end, the generation and net demand of electricity, the balance of imports, CO₂ emissions and the evolution of wholesale electricity prices were examined.

If demand remained the same, electricity generation would fall by eleven percent between April 2023 and March 2024. The reason: after the phase-out of nuclear energy, less electricity was produced in Germany from coal and nuclear energy . Although more electricity had to be imported, both CO₂ emissions and electricity prices fell because more energy was generated from renewable sources such as wind and solar.

“The majority of imports come from renewable energies,” emphasizes energis. About 32.2 terawatt hours (TWh), or 49 percent, came from renewable energy sources. Only 26 percent (17.6 TWh) came from fossil fuels and 25 percent (16.4 TWh) from nuclear energy. The specific CO₂ intensity of the electricity mix also fell last year, by a good 50 million tonnes.

Electricity costs are plummeting

“The average price of electricity on the stock market fell from €228/MWh (2022/23) to €83/MWh (2023/24),” according to the study. “The reasons for this are, among other things, lower gas prices and the greater availability of hydroelectric energy in Europe and nuclear energy in France.” This has very direct effects on consumers.

In concrete terms, this development could lead to a reduction in electricity costs for homes and businesses. This, in turn, could result in not only a more affordable electricity bill, but also potentially cheaper prices for goods and services. However, the impact on final consumer prices largely depends on the pricing policies of electricity suppliers and regulatory decisions. They determine the extent to which these savings are passed on to consumers.

An electricity price analysis by the Federal Association of Energy and Water Industries (BDEW) from February 2024 shows that “the average electricity price for households [gegenüber dem Jahresdurchschnitt 2023] “It has fallen almost 8 percent at the beginning of 2024.” It is now an average of 42.22 cents per kilowatt hour (ct/kWh) compared to 45.73 cents/kWh a year ago.

A look to the future

Based on its own scenario of current efforts, enervis also prepared forecasts for the coming years. Forecasts up to 2030 and 2045 show a significant increase in net electricity generation in Germany, with increases of 64 and 129 percent respectively compared to 2024. This increase is mainly due to the expansion of renewable energy. This means that Germany will become a net exporter of electricity in Europe in the long term, despite the phasing out of fossil-based electricity generation.

“The increase in electricity generation from renewable energies will cause a fall in electricity prices in the medium and long term,” explains the management consultancy. “According to Enervis forecasts, electricity prices in countries with high market penetration (for example, Denmark, Norway and Sweden) will be lower than in Germany. On the contrary, countries like Belgium, France or the Netherlands with less renewable energy will see higher electricity prices.”

However, this development also presents challenges for Germany, particularly regarding the volatility of electricity generation from renewable energy. To ensure security of supply even in times of low production from renewable sources, flexible and CO₂-neutral capacities are needed. “In addition to battery storage, this role will especially be played by gas-fired power plants that run on green hydrogen; On the other hand, nuclear power plants are less suitable due to their technical limitations.

Source: “A year of nuclear elimination in Germany – A look at the energy industry” (2024); Federal Association of the Energy and Water Industry

By Philipp Rall