German baseload power cheaper than French 12 months running
Yesterday, the European Energy Exchange (AEX) released figures for September, revealing that the price of baseload power in Germany has fallen by nearly 0.8 cents per kilowatt-hour over the past year – and has been cheaper than baseload power in France for 12 consecutive months.
The EEX published the trading results for September yesterday, but unfortunately the press release is currently only available in German. What it shows is that day-ahead prices in Germany & Austria are lower than in France or Switzerland both in terms of base load and peak load. Indeed, though the press release explains that prices on the German and French markets “converge 75% of the time” (during periods of low consumption, such as during the night and on weekends), the difference in prices has become considerable, with the difference in base load prices being 4% on the average for September.
And our colleagues at Photon magazine point out something in their German newsletter today (not in the English version) that the press release does not explicitly say – day-ahead prices have been lower in Germany than in France for 12 consecutive months. The average German baseload price in September was slightly below the price in August, so the downward pressure on prices continues. 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.
The news is especially important because nuclear power, which provides slightly more than 75% of France's power supply, is often held to be an especially inexpensive source of baseload power. Furthermore, opponents of renewables repeatedly voice their concern about the cost impact of green power scaring away industry. But in fact, industry by and large pays rates on the power exchange, which are determined by the most expensive power generator that needs to be ramped up to meet demand, not by the least expensive source. And over the past year in particular, the tremendous growth of photovoltaics in Germany has offset demand for more expensive peak power, thereby bringing down spot market prices.
Indeed, solar and wind power are even bringing down prices slightly in neighboring countries, such as Switzerland, but instead of being happy about the result, Swiss media complained that their power firms were becoming unprofitable. There was no call for these lower prices to be passed on to consumers.
By lowering power prices for industry by 18% over the past year, renewables have made Germany even more enticing for industry – even as industry continues to publicly voice its concerns about the potential cost impact. To add yet another example, German industrial giant Siemens announced a few weeks ago that it plans to cut a lot of its workforce in the “wind and solar power units,” with details expected on November 8, when the company announces its annual results. At the moment, all we know is that jobs will be cut in Siemens' US wind division. Apparently, power prices are not everything. (Craig Morris)