German industrial power prices hit new high

  • Market: Electricity
  • 10/14/21

German industrial power prices have reached another record high, energy-intensive industry association VIK said.

The latest VIK index for industrial power prices is 22pc higher on the month, at 324.50 points.

The index is at almost twice last year's level and is 52pc higher than the annual moving average.

Average wholesale power prices on energy exchange EEX for the following four quarters — fourth quarter 2021 to third quarter 2022 — rose by €9.94/MWh to €86.33/MWh for base load, and by €11.25/MWh to €91.31/MWh for peak load in September.

The VIK index is measured against a January 2002 baseline of 100 points. It is based on the outgoing month's average price for the first four EEX quarterly contracts, in combination with the load profile of industrial consumers using power for 3,000-6,000 hrs/yr, and typical grid access fees applicable to industrial users.

VIK's "final price" index is around 14pc higher on the month, at 434.88 points, as wholesale power prices account for a smaller share of this index. The final price index also takes into account taxes and duties levied on about half of the power consumed by Germany's industrial sector, which is not afforded the same exemptions as the power consumed by large, energy-intensive firms.

The gap between the VIK index and the final price index started to widen in 2009, mostly reflecting a large increase in the levy introduced under the renewable energies law (EEG). The EEG levy has been capped at €65/MWh this year. It stood at just €13.30/MWh in 2009. The levy for next year will be announced by Germany's power transmission system operators tomorrow.

Germany needs industry power price

Energy consumer association VEA, which represents mid-sized industrial companies, has demanded an industry power price for Germany.

The head of VEA's Berlin office, Eva Schreiner, warned at an event last week that high power prices could make it impossible for the industry sector to decarbonise. An industry power price would need to be no higher than €40/MWh to enable electricity to compete with gas. Changes to the EU emissions trading system (EU ETS) mean increases in the power price are inevitable, Schreiner said. Germany's mid-sized industry sector will face toughening competition over renewable power supply, she warned.

Schreiner commended the intention of all relevant political parties looking to form Germany's next federal government to abolish the EEG levy by financing it through the domestic carbon price and the general budget. Once the levy is axed, an industry firm could refinance self-consumption photovoltaic sites within 10 years, Schreiner said. Self-consumed electricity is subject to 40pc of the EEG levy, with the exception of smaller rooftop sites.


Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News
03/14/24

Utah governor signs some coal bills into law

Utah governor signs some coal bills into law

Houston, 14 March (Argus) — Utah governor Spencer Cox (R) signed two bills into law this week that are aimed at supporting the state's coal industry, and three other measures are awaiting his review after passing the state legislature. House Bill 191 and House Bill 48 will take effect on 1 May. The measures are part of a slate of legislation in Utah this year intended to prop up the state's coal industry, including by possibly slowing down coal-fired power plant retirements. More than half of the coal produced in Utah is shipped to power plants in the state, federal government data show. Utilities have plans to close four of the six coal plants in Utah by 2032. House Bill 191 instructs the Utah Public Service Commission (PSC) to consider a number of factors including reliability, dispatchability and affordability before ruling on utility proposals that include the "early" retirement of electricity plants. The other measure signed into law by Cox puts the Utah Office of Energy Development in charge of developing strategies for engaging with federal entities on state energy interests and overseeing legal strategy "on federal overreach and permitting delays." The same day Cox signed those bills, the legislature sent him Senate Bill 224, which establishes parameters for some utilities to pass on to ratepayers costs associated with acquiring, operating and maintaining "proven dispatchable resources" in the state. The measure also would allow large-scale electric utilities to establish a separate fund for paying damages from fires. The legislature also sent House bill 374 and Senate bill 161 to Cox on 12 March. Bill 374 directs Utah's Office of Energy Development to devise a state energy plan prioritizing reliable and dispatchable resources including coal and natural gas, and supports "efficient utilization and development" of both renewable and nonrenewable energy resources. Bill 161 would require the state Office of Development to establish a fair market value for power plants that are intended to be shut down, and gives the state the option of purchasing the plants. The last bill is thought to be aimed at possibly keeping the Intermountain Power Project (IPP) running on coal after operator Intermountain Power Agency completes construction of an 840MW natural gas and hydrogen plant in 2025, though the bill does not mention IPP by name. Cox has 20 days from the time he receives the bills to review them. The goals of House bills 374 and 48 "is to ensure Utah is taking prudent, measured approaches to its energy policy; this includes ensuring energy stays affordable and reliable," Utah's Office of Energy Development said. "These bills put the tools in place to ensure our office and industry are unified in our approach to energy development across the state." PacifiCorp, which operates two coal-fired power plants and three natural gas plants in Utah, did not immediately respond to a request for comment. The utility is expected to issue its 2023 Integrated Resource Plan by April. By Elena Vasilyeva Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Read more
News

UK government consults on delaying heat pump scheme


03/14/24
News
03/14/24

UK government consults on delaying heat pump scheme

London, 14 March (Argus) — The UK government today launched a consultation on delaying the introduction of its clean heat market mechanism (CHMM) heat pump incentive scheme by a year to 1 April 2025. The government has proposed cancelling the first year of the scheme — 1 April 2024-31 March 2025 — then continuing the scheme from the second year. "The government wants to provide industry with further time to prepare their businesses, and for more consumers to take up heat pumps before introducing the CHMM scheme," it said. The scheme will oblige heating appliance manufacturers to gradually increase the percentage of their sales made up of low-carbon appliances such as heat pumps, or acquire credits if they fall below a given threshold. In its present form, manufacturers must generate or acquire credits equivalent to 4pc of sales during the first year of the scheme and 6pc in the second year. Targets for subsequent years have yet to be set, but the government intends to increase the percentage to reach a goal of 600,000 heat pump installations per year by 2028. Industry associations and utilities last month called for the government to retain the scheme after reports that it was considering dropping or modifying it. And junior energy minister Lord Callanan last week defended the scheme in parliament. "We will be implementing it because it is an essential part of meeting that 600,000 target and, of course, our carbon budgets," he said. The consultation will be open until 9 May, so any change decided by the government would take effect after the scheme begins. By Rhys Talbot Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Australia’s Victoria to speed up renewable projects


03/14/24
News
03/14/24

Australia’s Victoria to speed up renewable projects

Sydney, 14 March (Argus) — Australia's Victoria state government announced today that all new renewable power projects will be treated as significant economic development and gain access to an accelerated pathway, as it looks to speed up renewable capacity additions. The changes will make new solar and wind power projects eligible for a streamlined planning pathway under Victoria's Development Facilitation Programme (DFP), with projects then able to bypass lengthy planning panel processes. Renewable projects currently stuck in approvals will also be able to access the accelerated pathway, the state government announced on 14 March. Since 2015, one in five applications for renewable projects have ended up at the Victorian Civil and Administrative Tribunal (VCAT). The accelerated pathway removes third-party appeals at the VCAT, with decisions to be made within four months from the time a complete application is lodged for an eligible project, the government said. A dedicated facilitation team will oversee all renewable energy applications under the accelerated pathway. Third-party objections will still have a place in the approvals process, the government said, but the changes "prevent time-consuming and repeated delays that hold these projects back for years." Australian renewable energy association the Clean Energy Council said that uncertainty on planning process timeframes and outcomes has been a leading cause of delay to renewable projects in Victoria. "Our understanding is that renewable energy developers will still need to self-assess whether an environmental effects statement (EES) is required," it said. "Currently, projects that require an EES are ineligible for the DFP pathway, which would cover many wind projects." No new wind farms were approved for development in Victoria during 2023, highlighting the need for a review of planning and assessment processes, the CEC noted. Coal-fired power dependent Victoria has a legislated target to source 50pc of its electricity generation from renewable energy by 2030, with an intention to raise the goal to 65pc by 2030 and 95pc by 2035 . The share of renewables in the local power mix reached 37.8pc in 2023, up from 35.1pc in 2022, 31.6pc in 2021 and 25.6pc in 2020, according to data from the National Electricity Market's OpenNem website. By Juan Weik Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Pennsylvania governor floats new CO2 market


03/13/24
News
03/13/24

Pennsylvania governor floats new CO2 market

New York, 13 March (Argus) — Pennsylvania governor Josh Shapiro (D) on Wednesday proposed a new program to require power plants to purchase allowances to account for their greenhouse gas (GHG) emissions, envisioned as a replacement for a similar multistate system that the state has been trying to join for years now. The program would set an overall GHG cap and require "55 or so" large power plants to purchase allowances at state-run auctions to cover their emissions, Shapiro said. If the legislature passes a bill to create the cap-and-invest program, Shapiro would "immediately" remove the state from the Regional Greenhouse Gas Initiative (RGGI), a multistate power plant carbon market. "We won't have any other state determining what is right for us here in Pennsylvania," Shapiro said. Despite Shapiro's misgivings about RGGI, which his predecessor strongly supported, his administration is currently appealing a court order that barred the state from participating. The state Supreme Court, which is controlled by judges elected as Democrats, is hearing the appeal to determine whether the state's CO2 trading regulations can go into effect. The new proposal is an attempt to respond to Republican and energy industry concerns about the effects of a carbon pricing program in a state that produces significant amounts of coal- and natural gas-fired power and is a net exporter of energy. Shapiro's office says that 70pc of all proceeds raised by program auctions will go toward reducing ratepayer costs, with some of the remaining proceeds going toward new clean energy investments — such as carbon capture and clean hydrogen — in communities that historically sited coal, oil, or natural gas facilities. Shapiro's proposal differs from other climate policy recommendations that have emerged from his administration. A working group of energy, labor, and environmental leaders last year recommended a cap-and-trade program covering all PJM Interconnection states, though such a proposal faces grim prospects in Republican-controlled legislatures in the region, such as in Ohio and West Virginia. A consultant hired by the Department of Environmental Protection more recently recommended an economy-wide carbon market covering more than just the power sector. Shapiro's plan, which has not been released as bill text, is otherwise light on details. It is unclear, for instance, how much authority the legislation would delegate to the Department of Environmental Protection to set CO2 caps and manage the program's nuances. PennFuture, one of the environmental groups suing in defense of the state's RGGI rule, said that Shapiro must demonstrate that his proposal would deliver the same amount of emissions reductions as RGGI. RGGI opponents reacted coldly to the governor's proposal. Senate majority leader Joe Pittman (R) said the "best way to swiftly advance meaningful discussions around energy policy" is for the administration to drop its RGGI appeal to the state Supreme Court. Coal groups said a Pennsylvania carbon market, even one with lower cost allowances than in RGGI, could still cost generators hundreds of millions annually and pressure some to retire early. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Australia’s large renewable investments hit new low


03/13/24
News
03/13/24

Australia’s large renewable investments hit new low

Sydney, 13 March (Argus) — Financial investment commitments to utility-scale renewable energy projects in Australia reached their lowest level in several years in 2023. But they can get back on track with the expanded Capacity Investment Scheme (CIS) scheme, the Clean Energy Council (CEC) said today. A total of A$1.5bn ($991mn) was committed to a combined 1.3GW of new large-scale renewable projects last year, down sharply from A$6.5bn for 3.8GW in 2022, the CEC said on 13 March in its annual report. This is the lowest level since it began tracking investment data in 2017. The slowdown reflects issues such as a constrained electricity grid, slow planning and environmental assessment processes in some states, higher costs and tighter markets for equipment and labour, the CEC noted. But regulatory uncertainty also played a major role, as investments have been gradually falling since Australia met its Renewable Energy Target (RET) ahead of the 2020 schedule , with the scheme's end date of 2030 affecting investment decisions, it added. Large renewable plants typically get accredited under the RET and can issue and sell Large-scale Generation Certificates, a key support mechanism that is scheduled to end at the end of 2030 . The industry had been lobbying for the federal government to commit to a new long-term national policy mechanism, which led to the creation of the CIS in 2022 and its expansion last November . The government plans to issue tenders every six months until 2026-27 to support 23GW of renewable generation capacity such as solar, wind and hydro and 9GW of dispatchable capacity such as pumped hydro and grid-scale batteries. Winners will need to start operating their assets by 2030, which could help the Labor party-led federal government meet its target of sourcing 82pc of electricity from renewable sources by 2030 across the National Electricity Market covering east Australia. ‘Urgent policy design' needed While the expanded CIS could put Australia back on track, "urgent and careful policy design" needs to be carried out in this year's first half to ensure the programme realises its objective of driving up private-sector investment in the sector, the CEC said. There were 56 renewable projects under construction as of December 2023 for a combined capacity of 7.5GW, down from 72 projects making up 9.5GW at the same point in 2022. Australia installed 2.8GW of new utility-scale renewable capacity in 2023, up from 2.3GW in 2022 and a "solid number" according to the CEC, but well below the figure of at least 6 GW/yr estimated by the Australian Energy Market Operator for the country to reach the 82pc renewable target. Out of the total last year, 1.9GW came from solar and 942MW from wind compared with 841MW and 1.4GW respectively in 2022. An overall 5.9GW of renewable additions were achieved in 2023, up from 5GW in 2022, driven by 3.1GW from rooftop solar compared with 2.7GW the previous year before, the CEC said. New financial commitments to utility-scale batteries reached a record of A$4.9bn, including hybrid projects with a storage component. This was up from A$1.9bn the previous year, with capacity under construction rising to 5GW/11GWh at the end of 2023 from 1.4GW/2GWh in 2022. Renewables accounted for 39.4pc of Australia's electricity generation last year, up from 35.9pc in 2022, the CEC said. By Juan Weik Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.