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Electricity price forecast

Client

vbw – Bavarian Business Association

Year

2022


Our mission

Momentum on the global energy markets is currently high. What developments in energy prices can be expected in the next few years? What impact will the rising price have on renewable energies and consumers? In order to clarify this and other questions, we were commissioned by the vbw to create scenarios for the development of wholesale electricity prices.

Our approach

The Prognos electricity market model was used to model future electricity market prices. It covers all power plants in Europe and models the dispatch of the wholesale market on an hourly level. This assumes both exchange with countries abroad as well as covering the domestic load. With regard to other parameters, such as the expansion of renewable energies and the development of electricity demand, we have aligned ourselves with the current energy and climate policy goals of the Federal Government and the EU. In addition to a range of electricity prices, the influence of hydrogen prices on the electricity market was also demonstrated. We have also shown that renewable energies will benefit greatly from the rise in electricity prices and that volatility in the electricity markets will increase significantly.

Core results

Our scenario calculation has the following results:

  • The price of electricity is heavily dependent on developments in gas prices.
  • Average electricity prices will be significantly higher in the next few years than in 2019/2020. Despite the subsequent decline from 2024, prices are also at a higher level in the medium and long term than before.
  • The volatility of electricity prices is also rising regardless of the level of gas prices. Volatility in the electricity markets is further enhanced by the expected fluctuations in gas prices.
  • Operators of wind turbines benefit from the rise in electricity prices through highly increasing revenues. These can be used to reduce electricity prices e. g. via CFD models, particularly in the case of limited space.
  • The development of end-user prices is strongly dependent on the development of certain political components of electricity prices. Changes in wholesale electricity prices affect consumers very differently, depending on the consumption case.
  • The power generation by using hydrogen can have a high impact on the level of electricity prices. Political incentive mechanisms for this still need to be clarified.

Links and downloads

On the vbw website you will find:

Electricity price forecast (PDF, in German)

Learn more (in German)

Project team: Sven Kreidelmeyer, Dr Almut Kirchner, Sebastian Lübbers, Dr Fabian Muralter, Aurel Wünsch

 

Latest update: 21.09.2022

Do you have questions?

Your contact at Prognos

Sven Kreidelmeyer

Project Manager

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About us

Prognos – Providing Orientation.

Prognos is one of the oldest economic research centres in Europe. Founded at the University of Basel, Prognos experts have been conducting research for a wide range of clients from the public and private sectors since 1959 – politically independent, scientifically sound.

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