Berlin, Germany — ESI-AFRICA.COM — 27 September 2011 – A surge in renewable energy in Germany is pushing power prices for 2013 below next year’s level even as natural gas, coal and emissions rise.
Broker prices on Bloomberg show that electricity for 2013 was 45 euro cents a megawatt-hour cheaper than next year’s contract today, after the gap widened to as much as 1.25 euros at the start of last week. The country “’ Europe’s biggest power consumer “’ will build 7,000 megawatts (MW) of solar and wind capacity in 2013 “’ 32% more than the additions planned for next year, according to Societe Generale SA.
Bloomberg News reports that Germany is installing more wind turbines and solar plants to offset halted atomic production, while limiting emissions from fuels such as coal and gas, which typically determine power prices. Industrial users in Europe’s biggest economy are buying supply for next year, as Germany’s biggest utility EON AG has already sold almost all of its electricity for the period, helping keep 2012 prices at a premium.
“Much of this premium has to do with new power plant projects coming online, both traditional coal and gas plants and renewable energy,” Sigurd Lie, a senior analyst at Nena AS in Oslo, said in an e-mail. Lie has studied Europe’s power markets for more than a decade.
Germany will build 9,600MW of power generation capacity in 2013 and retire 3,200MW of thermal plants using coal and natural gas, according to Societe Generale’s head of energy research Emmanuel Fages.
Germany’s BDEW utility association says the country obtained a record 20.8% of its electricity from renewable sources such as wind, solar, biomass and hydro in the first half of the year. Still, renewable energy is a less reliable form of production as it relies on fickle sunshine and wind while thermal and nuclear plants are able to generate around the clock, it adds.
“The forward price curve, with 2013 prices at a discount to next year, is justified, especially because of the prevailing new build of renewable generation,” said Peter Krembel, head of power, carbon and cross commodity trading for continental Europe at RWE Supply and Trading GmbH.