A price cap for gas for power generation would not depress the price of electricity as much as is commonly believed, said Johannes Mayer, head of the economics division at the regulatory agency E-Control. Because after the gas-fired power stations, which now determine prices, would come the coal-fired power stations – and also the one in Mellach, which in the future has to supply power again in the event of an emergency. And this one is also more expensive. Mayer expects the next price hike early next year.
If the gas price were capped, “an extremely large amount of gas would be burned, just like in Spain,” Mayer said at an E-Control conference Monday. Yet you would only win 30 to 40 euros per megawatt hour because then the coal-fired power stations, which are also expensive, would be used.
“One should subsidize coal”
At a gas price of 100 euros per megawatt hour (MWh) of gas, the electricity generated would cost 230 euros per MWh. With a coal price of around 305 euros and a CO2 price of 80 euros per tonne, coal power costs around 180 euros per MWh of electricity. After the gas-fired plants, which currently determine electricity prices, the coal plants would be the next step, Mayer explains. “If you really want low prices, you should also subsidize coal.” But that would be very large sums that would have to be supported in Europe with taxpayers’ money. The latest price increases in the gas sector have led to it now approaching 270 euros.
The expectations of dealers indicate that prices will still be high in 2024. “If you look at CO2 prices and coal prices, that probably remains at a relatively high level.” Electricity prices below 10 cents per kilowatt hour are relatively unlikely in the coming years. “Renewable energy subsidies are more of an outdated model,” Mayer says, which wouldn’t be necessary because most technologies would pay off. “Secondly, however, it means switching to electrical power is potentially an expensive affair.”
Energy is likely to become even more expensive
Households should be prepared for a relatively large price increase for electricity and gas early next year. Electricity currently costs between 300 and 500 euros per year for only the energy bill and gas 450 to 800 euros. Given the wholesale prices for the future, one should probably count on 1100 euros per year for electricity and 1600 euros for gas.
Source: Krone
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
