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Electricity price explosion in Germany: is the coal and nuclear phase-out to blame?

Electricity prices are currently at record levels., Could the phase-out of nuclear and coal play a role in this?, An ecologist and an energy economist explain the background to the development.

    Electricity prices are currently at a record level. Could the phase-out of nuclear and coal play a role in this? An ecologist and an energy economist explain the background to the development.

Energy prices in Germany are currently exploding. Many critics blame the simultaneous phasing out of coal and nuclear energy. Could it be that the market cannot handle such an effort?

"The nuclear phase-out plays a completely subordinate role in the recent price explosion," says Stefan Holzheu from the Bayreuth Center for Ecology and Environmental Research. "The main reason is the increased price of fossil fuels, especially gas."

Among other things, this is related to the corona pandemic, says Holzheu. "In 2020, for example, gas prices were so extremely low that there was no investment in gas production. Now that demand is increasing, this is leading to bottlenecks and high prices."

The economist Claudia Kemfert also sees the current gas crisis as the main reason for the increased electricity prices. "The latter arose above all as a result of the geopolitical disputes, particularly with Russia, as a result of which gas supplies have been reduced and gas prices have exploded," says Kemfert in an interview with our editors.

Electricity price explosion: should the nuclear phase-out be reversed?

Kemfert explains that rising gas and CO2 prices have led to higher electricity exchange prices. And price-lowering factors – such as the reduced EEG surcharge – would be passed on to consumers only hesitantly. Thus, the politically intended reduction in electricity prices cannot really be achieved by reducing the EEG surcharge.

The rise in the price of fossil energies is also fueling a discussion that seemed to be over in Germany long ago: there are more and more voices calling for nuclear power plants to have their operating lives extended. Even the construction of new kilns is suddenly being discussed, at least until renewable energies become an affordable alternative.

France in particular serves as a model. The Grande Nation relies fully on nuclear power and, with 56 reactors, has the densest network of nuclear power plants in the world. Consequently, France was also the driving force behind classifying nuclear power and natural gas as climate-friendly forms of energy in the EU.

How expensive is nuclear power really?

But how expensive is electricity from renewable energies compared to coal and nuclear power? "Nuclear power is expensive," says Claudia Kemfert. "There are high costs for nuclear power, especially hidden costs." The data is often falsified because the massive support for nuclear energy from taxpayers' money is usually not taken into account, explains the scientist.

This is confirmed by a study in which Kemfert also participated. The conclusion: "The commercial use of nuclear energy (…) has (…) never made the leap to a competitive energy source. Even the ongoing operation of older nuclear power plants is becoming increasingly uneconomical today. Extending the service life is technically and economically risky. With new construction of nuclear power plants of the current 3rd generation, losses of several billion US dollars or euros must be expected. In addition, there are considerable and currently largely unknown costs for the dismantling of nuclear power plants and the final disposal of radioactive waste."

"A nuclear power plant is not a kettle" – Atom is not an alternative for climate protection

That is why nuclear energy is not a cheap investment in climate protection either: "Energy economic analyzes show that compliance with ambitious climate protection goals (global warming 1.5 degrees to below 2 degrees) is not only possible without nuclear energy, but is also more cost-effective with renewable energies when system costs are taken into account ."

For Stefan Holzheu, the debate is over given the fact that only three nuclear power plants are still connected to the grid in Germany. "A nuclear power plant is not a kettle that you can use for a few more years. To continue operating, you need fuel rods, personnel, safety upgrades. The debate should have been held much earlier. Not a single operator has shown any interest in extending the service life. And they should be able to assess the subject best."

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Which are the cheapest generators? Fraunhofer study shows surprising result

But what about electricity from coal? This is only cheap "because a large part of the costs are shifted to the future," says Stefan Holzheu. "If you were to factor in the costs of climate change, we would be over 50 cents/kWh." For comparison: electricity from onshore wind turbines was between approx. 3.94 and 8.29 cents/kWh in 2021.

The figures come from a study by the Fraunhofer Institute, which comes to a clear conclusion. According to this, photovoltaic systems and onshore wind turbines are "not only among the renewable energies, but among all types of power plants on average the technologies with the lowest electricity production costs in Germany".

But one question worries many in view of the energy conversion: Is the energy supply in Germany still secure? Claudia Kemfert agrees: "In the past, the generation capacities of nuclear energy were primarily replaced by renewable energies. During the nuclear phase-out period of almost 20 years, the share of renewable energies in electricity generation increased from almost zero to almost 50 percent. Thus, the proportion of nuclear energy capacities that were lost was more than compensated for by renewable energies."

Fear of dependence on electricity imports unfounded

The fear of dependence on electricity imports is also unfounded. "Germany is a net electricity exporter," says Kemfert. And Stefan Holzheu also reassures: "There is nothing wrong with importing electricity. There is still enough generation capacity in Germany. But why should you burn expensive gas when Denmark has a surplus of wind power or France offers nuclear power cheaper?"

The question remains as to how electricity prices will develop? How much will the wallet be burdened in the next few years? When asked the question, both experts are optimistic: "It is assumed that gas prices will fall again in 2023," says Holzheu.

And the expansion of renewable energies can also have a positive effect, as Claudia Kemfert explains: "If the expansion of green electricity goes faster than previously planned, electricity prices on the exchange will drop significantly. The higher the share of fossil energies, the more expensive it will be for consumers Consumers. Gas and coal in particular make electricity expensive. Renewable energies have a price-lowering effect."

And a price cut is likely to be exactly what consumers are hoping for.

About the experts: Dr. Stefan Holzheu is a researcher at the Bayreuth Center for Ecology and Environmental Research.
Prof. Dr. Claudia Kemfert is an energy economist and head of the Energy, Transport and Environment department at the German Institute for Economic Research (DIW Berlin) and a professor at the Leuphana University of Lüneburg.

Sources used:

Interview with Stefan Holzheu, Interview with Claudia Kemfert, Wealer, Ben, Breyer, Christian, Hennicke, Peter, Hirsch, Helmut, von Hirschhausen, Christian, Klafka, Peter, Kromp-Kolb, Helga, Präger, Fabian, Steigerwald, Björn, Traber , Thure, Baumann, Franz, Herold, Anke, Kemfert, Claudia, Kromp, Wolfgang, Liebert, Wolfgang, & Müschen, Klaus. (2021). nuclear energy and climate. In discussion papers of the Scientists for Future (1.0, Vol. 9, pp. 1-98). Zenodo., Fraunhofer Institute for Solar Energy Systems ISE: Electricity generation costs for renewable energies June 2021, zeit.de: Atomic Union Europe

    Interview with Stefan HolzheuInterview with Claudia KemfertWealer, Ben, Breyer, Christian, Hennicke, Peter, Hirsch, Helmut, von Hirschhausen, Christian, Klafka, Peter, Kromp-Kolb, Helga, Präger, Fabian, Steigerwald, Björn, Traber, Thure, Baumann , Franz, Herold, Anke, Kemfert, Claudia, Kromp, Wolfgang, Liebert, Wolfgang, & Müschen, Klaus. (2021). nuclear energy and climate. In discussion papers of the Scientists for Future (1.0, Vol. 9, pp. 1-98). Zenodo.Fraunhofer Institute for Solar Energy Systems ISE: Electricity Generation Costs Renewable Energies June 2021zeit.de: Atomic Union Europe
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