Why does the price of electricity in Germany keep falling?
Chancellor Angela Merkel paved Germany’s way towards a renewable energy economy in 2010 with her “Energiewende” plan. The result has been an unstoppable drop in wholesale electricity prices, which have fallen to their lowest levels in 12 years.
Solar and wind power has grown exponentially with Germany’s plan to achieve up to 60% of its energy use from renewable sources by 2035, up from 28% today. Photovoltaics are breaking production records. This is seriously hurting the big power companies in Germany, which are seeing the margins of their coal and gas plants plummet because it is cheaper to buy green energy.
On the contrary, wind turbine manufacturers increase their results year after year.
The demand for electricity consumption fell 3.8% last year, despite the fact that the German economy grew by 1.4%. Warmer winters and increased energy efficiency point to reductions in consumption in the future.
But, as wholesale prices fell 13% last year, subsidies to fund the Energiewende plan pushed German consumers’ bills to second in the European Union, after Denmark. Domestic prices increased by 2% in 2014 compared to the previous year, as Eurostat data show.