Permanently fluctuating?
Many hope that electricity prices will return to pre-corona levels. A study by Prof. Dr. Mario Liebensteiner from Friedrich-Alexander-Universität Erlangen-Nürnberg (FAU) sees little chance of this happening.
From a scientific perspective, there will be no return to the previous normal situation. On the contrary: the wholesale electricity price in 2025, which has just begun, will be between EUR 94 and EUR 114 per megawatt hour (MWh), at least on average. That would be more than six times as much as before the energy crisis. However, prices per MWh on the electricity exchange fluctuate in the short term between around EUR – 100 and around EUR 1,000. “Our study is not an exact price forecast,” emphasizes Prof. Dr. Mario Liebensteiner, Professor of Energy Markets and Energy System Analysis at FAU. “Rather, it forecasts a high and above all volatile wholesale electricity price for the coming years.” The study High electricity price despite expansion in renewables: How market trends shape Germany’s power market in the coming years was published in the journal “Energy Policy”.
Study forecasts prices until 2030
The study by Prof. Liebensteiner, Anas Abuzayed, PhD student at FAU, and Dr. Fabian Ocker from TenneT TSO GmbH takes into account the most important market trends for the development of the electricity price in Germany up to 2030 and develops scenario forecasts on this basis. The basis is an econometric model that uses historical electricity market data for Germany from 2015 to 2023. This allows the interplay and influence of defined market trends such as wind and solar power, electricity demand, nuclear energy, CO 2-certificates, gas prices and electricity trading on the wholesale electricity price on the exchange.
Market trends systematically calculated
“The forecast of the electricity price corresponds to a so-called basic variant of the scenario forecast. It takes into account the most important influencing factors and assumes a continuous development without upheavals, such as economic crises or further wars,” explains Mario Liebensteiner. “A further planned expansion of renewable energies thus ensures a downward trend in electricity prices.” At the same time, however, growing demand for electricity is driving up prices. E-mobility, heat pumps, building air conditioning, data centers and, in the future, electrolysers for hydrogen production are all contributing to this. Energy is also becoming more expensive due to continuously rising CO 2-price, which puts a strain on fossil fuels such as coal in particular. The price of gas, which is now significantly higher than before the energy crisis due to the geopolitical turmoil with Russia, is also leading to higher electricity prices.
However, the study expects prices to rise moderately. Another influencing factor is the export and import of electricity within Europe.
Various scenarios
By 2030, the baseline scenario predicts a stock market price for electricity that could be around three times higher than before the energy crisis. If there is stronger growth in the expansion of renewable energies, with otherwise unchanged framework conditions, the price of electricity could fall further over the next five years. The study identifies a price-driving effect in the German nuclear phase-out. Available nuclear power would have a strong effect on the price of electricity. However, Liebensteiner points out that so-called externalities are not taken into account in the study. These include the general nuclear risk or the costs for interim and final storage facilities .
The scenario analysis also shows the significant pressure on electricity prices from higher electricity demand, for example due to the electrification of industrial processes. A higher gas price or a stronger increase in the CO2 price also drive up the exchange prices.
Electricity price hikes are the new normal
The growing share of renewable energies in the mix of electricity generation will lead to greater price swings up and down on the exchange in future. This volatility occurs within a day, from day to day or depending on the time of year. In mid-December, for example, a dark doldrums – no sun and no wind – caused a short-term price jump to around EUR 1,000 per MWh. “On a sunny summer afternoon, the electricity price can sometimes turn negative. This means that customers receive money if they consume more when there is an overproduction of wind and solar energy,” explains Mario Liebensteine r.
With their study, the authors aim to provide policymakers with fact-based guidance for shaping future energy policy. At the same time, the study also indicates to industry and commerce which investments are likely to be worthwhile in terms of energy costs. (pq)
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