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ICIS Analysis: German power price to rise following coal phase-out

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World Coal,

The upcoming meeting of Germany's coal commission on 18 September 2018 – an expert committee tasked with putting forward a timeline for exiting coal generation within a socially acceptable framework – is the next step towards a changing power market landscape in Europe.

In order to simulate the impact of four coal phase-out scenarios and their impact on German power prices and CO2 emissions towards 2030, ICIS energy analytics team utilises the ICIS Power Horizon model that has been launched on 17 September 2018. The results from the model have been published in an ICIS analysis report on 17 September.

"Our models show that a German coal phase-out has the potential to significantly increase German spot power prices to levels between €55/MWh and €60/MWh through to 2023," says Marcus Ferdinand, Head of EU Power and Carbon Analytics at ICIS and the author of the analysis report.

"The expected power price increase is a result of reduced overcapacity coupled with an expected increase in the European carbon price, which will be an incubator for fostering additional investments in renewable energy sources in Germany," Ferdinand adds.

In addition, the ICIS Power Horizon model shows that a rapid phase-out of coal and lignite capacities has the potential to create supply shortages during times of high demand and low renewable generation, leading to significant price spikes during certain hours of the year.

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