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Electricity Markets Stabilized Following the Energy Crisis; 80 Percent Renewable Energy and Coal Phase-out by 2030 Are Possible

DIW Weekly Report 16/17/18 / 2024, S. 129-136

Mario Kendziorski, Lukas Barner, Claudia Kemfert, Christian von Hirschhausen, Enno Wiebrow

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The German electricity market has recovered well from the 2022 energy crisis. Policymakers should now redirect the focus of energy policy to further expanding renewable energy sources. The year 2023 showed that the German electricity supply remained secure following the shutdown of nuclear power plants. It is possible, affordable, and plausible in light of climate policy to cover 80 percent of electricity consumption with renewable energy sources, as the German Renewable Energy Sources Act plans for by 2030. However, a swift exit from coal, and natural gas in the long run, is required to achieve this, as is suggested by scenario analyses that track the price and volume effects as well as the grid situation on the German electricity market for the present and for 2030. The shutdown of nuclear power plants has been planned for a long time and was by no means a relevant driver of electricity prices. Rather, French nuclear power plants’ erratic downtimes as well as war-related increases in gas prices drove up electricity prices. The construction of new nuclear power plants, which has been discussed by policymakers, is irrelevant for the energy transformation over the next decades. The natural gas crisis has also ended. In addition to the coal phase-out, the fossil fuel phase-out is an integral part of the energy transformation.

Claudia Kemfert

Head of Department in the Energy, Transportation, Environment Department

JEL-Classification: L51;L94;Q48
Keywords: Electricity market, renewables, coal exit, natural gas exit, nuclear power