German industry power prices – a comparison
Increasingly, there are charges that Germany's energy transition will scare off industry, but these firms will have to go somewhere. A quick look at industry prices within the EU over the past decade reveals that German industry prices are becoming more competitive, not less.
A picture is worth 1,000 words, but a good chart takes longer to make than 1,000 words – at least if you are a writer like me. Nonetheless, I know that raw data do not speak for themselves, and when I looked at Eurostat's overview of industry power prices within the EU, I realized they told a number of stories.
First, the big one: German power prices for industry are currently below the EU average, and the trend is for that gap to increase even further. From 2001 to 2010, German industry power rates were actually above the EU average, but the gap was closing, and Germany fell below the average in 2011 and 2012. The gap is currently widening, meaning that Germany is becoming less expensive relative to the EU average.
Second, Germany is becoming more competitive compared to the leading industrial countries in the EU. In the chart, I grey out all countries except Germany, Italy, Spain, the UK, France, and the Netherlands. The gap between Germany and France was the greatest in 2007 when French power cost around 5.5 cents, compared to around 9.5 cents in Germany. That difference is now less than one cent, with German industry power prices continuing to drop, while French prices continue to rise.
Likewise, energy-intensive industry will not be leaving Germany for the UK, Spain, and Italy, all of which have clearly higher industry prices at present. The Netherlands is an exception here – ironically because the Dutch have become major importers of inexpensive power from Germany.
Third, German industry power prices have been flat for five years, whereas the overall trend is up. From the gray lines, you can see that power prices in all countries are generally on the rise. In the legend to the right, incidentally, countries are listed in order of their power price starting with Lithuania at the top and going to Finland at the bottom for the year 2012 so you can see how the countries are ranked; note that Germany, Italy, Spain, the UK, and France are not part of that ranking.
Interestingly, the data for the Dutch show that they start out in 2005 with the second highest industry power prices but were cheaper than France in 2012 and increasingly becoming competitive even with Scandinavia.
The data are much more interesting, and there are other stories to tell. For instance, a similar chart could be made of nuclear-heavy countries, such as France, the Czech Republic, and Belgium. That chart would show that all of these countries have steeply rising power prices – in the case of the Czech Republic, from 4.7 cents in 2001 to a whopping 10.3 in 2012 (compared to Germany's 9.0 cents in 2012). Industry prices in Belgium have also risen from 7.5 to 9.5 cents during that timeframe.
Another interesting comparison would be with the Scandinavian countries, which start out with incredibly low prices and are still near the bottom at the end, but there are some wild fluctuations in between, which are unfortunately lost in the gray lines in my chart. Maybe this fall I will be able to do an interactive graphic so you can make all of these comparisons for yourself.
Finally, Bulgaria continues to have some of the cheapest power prices within the EU – a clear sign that low power prices do not necessarily turn a country into an economic power.
My conclusion is clear: any energy-intensive firm that takes a non-ideological look at the data will find that Germany looks better now than it did a decade ago within the EU, with only Scandinavia remaining more attractive in terms of industry prices alone. (Craig Morris)