Coal phase-out to have very little impact on electricity prices
This is the finding of an in-depth analysis conducted by the ‘Agora Energiewende’ think tank, according to which the phase-out will in fact bring financial benefits for energy-intensive industries.1 Sep 2019 Barbara Rusch
How will phasing out coal power impact the German energy sector, electricity prices, and the achievement of emissions targets? The Agora Energiewende think tank has analyzed the report by the Commission on Growth, Structural Change, and Employment (otherwise known as the ‘Coal Commission’). The analysis compares the recommended phase-out of coal-fired generation and a business-as-usual scenario with no coal phase-out or additional expansion of renewables. According to the findings of this analysis, the phase-out of coal-fired generation in conjunction with the expansion of renewables will have very little impact on electricity prices: In 2030, 1 kWh of electricity will cost around 1% more than today, in the scenario of the expansion of renewables to 65% of the power mix, in combination with a two-thirds reduction in coal generation, as foreseen by the German Coal Commission. The coal compromise, which this commission agreed to in early 2019, will also ensure that electricity prices remain competitive. The study’s calculations indicate that household customers will pay in real terms approximately 0.4 cents per kWh more in 2030 than they do today.
Grid usage fees – a surcharge on the electricity price to pay for the expansion and modernization of the electricity grid – would continue to make up the largest portion of electricity costs. Energy-intensive industries even stand to benefit from the coal compromise, since by 2030, the robust expansion of renewables will have reduced the wholesale price of electricity by approximately 0.5 cents per kWh relative to the business-as-usual scenario.
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