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Wholesale Electricity Prices in Germany Lower in 2024 Than in 2021 With Six Nuclear Power Plants

Münster, Germany - German wholesale electricity prices fell by 16.8% to an average of 7.95 cents/kWh in 2024 compared to the previous year. Despite the nuclear phase-out, electricity prices on the exchange fell again last year to below the level of 2021 (9.66 cents/kWh), when six nuclear power plants were still in operation in Germany. This is according to an analysis of data from the EPEX Spot Power Exchange by the International Economic Forum for Renewable Energies (IWR).

The Russian invasion of Ukraine has already led to considerable distortions on the energy markets from mid-2021 and then to explosive increases in electricity and gas prices in 2022. In 2024, wholesale electricity prices fell again for the second year in a row after 2023. However, the after-effects are still being felt in the current wave of inflation.

Wholesale electricity prices fall by 16.8% in 2024 - prices below the 2021 level

Electricity prices in the German wholesale sector will continue to fall in 2024, dropping by 16.8% to 7.95 cents/kWh (2023: 9.55 cents/kWh). This is the second price decline in a row. Despite the complete nuclear phase-out, the price of electricity in 2024 will even be below the level of 2021 (9.66 cents/kWh), when six nuclear power plants were still in operation in Germany, according to the IWR.

The rapid rise in wholesale electricity prices between mid-2021 and the end of 2022 was the result of a historic combination of factors: the dramatic increase in gas prices due to the Russian invasion of Ukraine and the massive outage of French nuclear power plants due to maintenance delays in the wake of Covid-19 as well as voltage corrosions discovered at the end of 2021.

From mid-2021, wholesale electricity prices in Germany climbed almost threefold from 5.3 cents/kWh (May 2021) to 14.0 cents/kWh in October 2021 due to the rise in gas prices and low gas storage levels. The German gas storage facilities sold by Germany to Russia were apparently no longer replenished to the necessary extent by Russia from summer 2021 in preparation for the Russian invasion of Ukraine in February 2022.

Expensive electricity from fossil gas-fired power plants fuelled electricity prices

According to the IWR, the direct impact of rising gas prices on wholesale electricity prices is in turn linked to the type of daily pricing on the electricity exchanges. This pricing is based on a marginal cost model in which only the most expensive energy source determines the overall electricity price for everyone, even if cheaper sources are also used.

“High gas prices due to empty gas storage facilities and the outage of French nuclear power plants have led to wholesale electricity prices in December 2021 being more than twice as high at 22.1 cents/kWh compared to 10.8 cents/kWh in December 2024, when no German nuclear power plants were in operation, despite six operating nuclear power plants in Germany,” says IWR CEO Dr. Norbert Allnoch.

The dramatic rise in wholesale electricity prices in August 2022 to a record level of 46.5 cents/kWh was also primarily due to the explosion in gas prices following the shutdown of the Nord Stream 1 gas pipeline.

Late effects: Rising energy prices lead to higher inflation

The sharp rise in electricity and gas prices following the Russian invasion of Ukraine led to energy price-induced inflation from 2022, and not only in Germany. The knock-on effects, such as significantly higher interest rates and a wage price spiral that has not yet ended, are still being felt today, despite the fact that electricity prices have since fallen sharply back to pre-crisis levels.



Source: IWR Online, 17 Jan 2025