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Electricity prices are currently falling. But in the long run, experts believe a price of 60 to 80 cents per kilowatt-hour is realistic if the expansion of renewable energy doesn’t keep up with demand.
“It’s a very dramatic development,” Guido Boveleth, a baker from Bedburg in the middle of the Rhine coal mining region, summed up the past few months. In order to be able to produce fully economically, he now has Mondays off. He also does not have two assistants to cover the high energy costs. Since the start of the year, Boveleth has been paying €3,700 more per month for gas and electricity than in the previous year.
The baker thinks he’s doing everything right. Three years ago he invested in a new energy efficient gas furnace. This consumes thirty percent less than the old model. His new solar system started running a few weeks ago. It meets half of his electricity needs. With current high electricity rates, it pays for itself twice as quickly, Boveleth said.
Electricity is more expensive, coils are more expensive
He couldn’t be happier about it. After all, he has to pay a high price for the other half of his electricity bill. Since the beginning of the year, he signed a three-year contract at 48 cents per kilowatt-hour; double what he paid last year. His baked goods have also gotten more expensive since then — up an average of 15 percent. “It annoys me that we’re investing in the future now, investing in energy-efficient appliances. But that’s not having a positive impact on me,” says the bread guru.
Electricity prices are currently falling again. According to Internet comparison portals, they pay an average of around 30 cents for a new customer. However, it is doubtful that the levels will remain the same. In the future, the demand for electricity will grow rapidly due to more heat pumps and electric vehicles.
When gas-fired power plants must step in
Jürgen Karl from the Friedrich-Alexander University of Nuremberg-Erlangen sees this growing demand for electricity as a bottleneck for the energy transition. If renewables don’t expand fast enough, there will be a power gap that needs to be filled.
That is why experts in energy process engineering fear that “gas-fired power plants will have to be used more and more frequently in the future”. If gas prices rise again, the start-up of gas-fired power plants will in turn affect electricity prices. As a result, he thinks “a price of 60 to 80 cents per kilowatt-hour is realistic by 2030,” Carr said.
How big is the power gap
Detlef Stolten, Director of the Forschungszentrum Jülich Institute for Energy and Climate Research, writes for the ARD business magazine plus or minus Calculate how severe power shortages could become if expansion continues to be as sluggish as it has been for the past two years. The result is a power gap of 104 GW. “Reduced to a very simple denominator, if expansion continues as it has done over the past two years, about a third of capacity will be lost by 2030.”
That has to be replaced by faster expansion, Stolten said. While renewables are currently expanding, it is uncertain whether the pace for the remaining seven years will be sufficient.
Are expansion plans realistic?
When he took office a year and a half ago, Federal Economy Minister Robert Habeck had recognized that the expansion of renewable energy was not in good shape and that the 2030 climate targets were in jeopardy. He hastily packed what he called an Easter package. The plan: From 2025, Germany’s wind power capacity will grow by 10 GW per year.
Torsten Levsen, head of wind farm developer Denker & Wulf, stands in the middle of the construction site for his three new wind turbines. He has been building wind farms for 30 years. He called political targets a beacon of pressure on the industry — but said it would be difficult to achieve. “We want to achieve our goals. On the other hand, it’s important for us that we don’t get overwhelmed,” warns Levsen. “I don’t think it’s realistic to get to 10 gigawatts in the next eight years.”
In a few weeks, the massive wind turbines will be up and running, each producing 6 megawatts of electricity. 4GW of newly installed wind power capacity across the country. At least twice as much as in previous barren years. But the huge parts still lie on the ground.
Impact of price increases on electricity customers
Torsten Levsen mentioned another problem. Because inflation is also putting pressure on the industry. Module prices have doubled and financing rates for larger systems have tripled, Levsen said. Overall, the investment costs of a modern wind turbine with an output of around 5.5 megawatts doubled within a few months, from 3.5 million euros to around 6.2 million euros.
Levsen worries that electricity customers will feel the impact. Whether green electricity will actually one day be as cheap as politicians once promised remains to be seen. “In the end, my concern is that fossil fuels will dictate the price of electricity in the market. If we don’t make progress on the energy transition, then whenever there is a shortage of electricity, fossil fuels will set the price.” This will lead to higher prices. “