German Power Market Forecast – Annual Report 2017

Germany’s Energiewende (“Energy Transition”), including generous subsidies for intermittent renewables, the phase-out of nuclear energy and the decision to maintain an energy-only market, will fundamentally alter the German power market in the years to come.

In this context, our German Power Market Forecast serves as a comprehensive stock-taking document, which outlines and analyses market prospects as they currently stand. Using our in-house dynamic dispatch model AER-ES DE, we forecast electricity prices, spark spreads, dark spreads, future generation mix, capacity growth, and price dispersion. Key market analyses presented in addition to these projections include:

  • A full update on energy policy developments in Germany and Europe, and their influence on future market structure and price formation
  • The impact of increased wind penetration on their capture prices
  • The likelihood of Germany achieving its climate targets
  • The asset performance and utilisation of conventional plants

Our key modelling assumptions result from in-depth market research drawing on the unparalleled expertise of our Directors and Senior Advisors across the energy, policy, environmental and financial sectors, and are further refined through a detailed consultation process across private and public sector players. We incorporate all of the most recent policy changes as well as our in-house fuel price projections derived with Aurora’s global general equilibrium model AER-GLO.

The analysis, which transparently lays out its underpinning mechanics, forecasts that power prices will remain depressed in the short term, and a significant recovery to previously common price levels can only be expected in the medium term.

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