Published on October 8th, 2012 | by Nicholas Brown22
German Baseload Power Cheaper than French 12 Months Running
October 8th, 2012 by Nicholas Brown
The EEX (European Energy Exchange) recent report on September’s trading results showed that both peak-load and baseload day-ahead electricity prices in Germany and Austria are lower than that of Switzerland and France.
The EEX press release does mention that electricity prices converge (meet each other) 75% of the time. However, during periods of low power demand, the prices differences mentioned above come about. These low-demand periods are usually at night and on weekends. (Low demand and high supply causes electricity prices to drop in this kind of market.)
The average price difference in September was 4%. “The drop over the past 12 months in Germany has indeed been quite dramatic at around 18% – from 5.264 cents per kilowatt-hour in September 2011 to the current 4.467 cents last month.”
In other words, as Germany’s renewable energy has boomed, its electricity prices have dropped relative to those of its nuclear-heavy neighbors.
This news is especially important due to the fact that nuclear power, which provides about 75% of France’s electricity, is often touted as a particularly inexpensive source of baseload power (if it is from old nuclear power plants). But, that doesn’t seem to be the case here.
Also, renewable energy opponents repeatedly voice their concern about the cost impact of low-emissions power sources scaring away “industry.” Odd. The cost impact seems to be a beneficial one here.
Industry pays rates on the power exchange, which are determined by the most expensive electricity generators that need to be ramped up to meet demand. Over the past year, in particular, the tremendous growth of PV power plant usage in Germany, which increases peak power production considerably, has offset the demand for more expensive peak power, thereby bringing down spot market electricity prices.
Renewable energy growth has been tremendous in Germany, which has been pursuing it aggressively. As a matter of fact, solar power is much cheaper in Germany, largely due to the economies of scale they have achieved from to their large-scale adoption of it, and from lower “soft costs” and limited subsidies.