Tuesday, July 6th, 2021
“A huge burden”
Industry warns of high electricity prices
Prices are rising on the Leipzig power exchange. The industry in particular sees this with unease – it expects burdens and sees politics as the responsibility to deliver. Because experts do not expect a quick turnaround.
The wholesale prices for electricity have risen sharply in recent months. At the electricity exchange in Leipzig, the quotations for deliveries in the coming year have more than doubled since March 2020 to over 70 euros per megawatt hour. Wholesale electricity has not been so expensive for around twelve years. The electricity-intensive companies in Germany therefore fear for their competitiveness.
“The rise in wholesale prices for electricity is a huge burden for the industry,” warned the deputy chief executive of the Federation of German Industries, Holger Lösch. With this price level, the European electricity market is moving more and more away from the industrial electricity prices of competing markets.
How strong the rise in stock market prices will affect private households cannot yet be foreseen. Thorsten Storck, energy expert at the comparison portal Verivox, expects “that another wave of electricity price increases will hit households in autumn”. If the electricity supplier were to pass on the price increase directly on the stock exchange, that would correspond to a consumer price increase of around 2.5 percent, he calculated. For a household with an annual consumption of 4000 kilowatt hours, this would be additional costs of around 30 euros.
CO2 price rises
Germany’s largest electricity supplier Eon currently sees no reason for price increases in the increased wholesale prices. Energy purchasing, sales and service only accounted for around a quarter of the electricity price for households, explained a company spokesman. Eon also buy the required amounts of energy in the long term. That is why “short-term fluctuations – as we are currently experiencing – have no direct impact on our electricity prices”.
In the case of industrial electricity, the fluctuations in the purchase price have greater consequences. Certain energy-intensive companies are relieved of taxes and duties, which means that the proportion of procurement costs in their electricity bills is higher than for households. But the following also applies to industrial consumers: Since electricity prices fluctuate significantly, they do not buy everything at once, but rather purchase partial quantities at different times. In the first half of last year, for example, they benefited from very low stock exchange prices in the corona lockdown.
The wholesale price is currently driven primarily by two developments: The certificates for the emission of the greenhouse gas CO2 and the fuels have become significantly more expensive. “With a CO2 price of 50 euros per tonne, the generation costs of a gas-fired power plant rise by around 2 cents per kilowatt hour, for a hard coal-fired power plant it is around 4 cents and for a lignite-fired power plant even almost 6 cents,” said energy economist Andreas Löschel from the University of Münster . “At the same time, gas prices have risen very sharply, and that’s on top of that.”
Demands on politics
In Löschel’s assessment, not much is likely to change in this development. “The CO2 prices will probably stay at the current level in the long term, if they do not even rise further.” In addition, the nuclear phase-out is beginning to make itself felt. “We are slowly seeing a shortage in the electricity supply.” So far, the shutdown of the nuclear power plants has hardly made itself felt due to the expansion of renewable energies. This year and next, however, larger nuclear power capacities would be switched off in a short period of time. “This means that power plants with low production costs will go offline.”
Economist Löschel, BDI and consumer advocates agree that only politics can prevent a further increase in electricity prices. “The income from the CO2 price must be used to bring down the taxes and surcharges that are on the electricity price,” demanded Löschel, who heads an expert commission of the federal government.
“The electricity price is political and that will not change in the next few years”, emphasized Udo Sieverding, energy expert at the North Rhine-Westphalia consumer center. With the reduction or abolition of the EEG surcharge and the electricity tax, a new federal government could “freeze or even lower the electricity price and reduce the burden on private households”. This will also advance the energy transition.
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