Wholesale electricity prices fall for the second year in a row in 2024 - electricity prices lower than in 2021

Wholesale electricity prices fall for the second year in a row in 2024 - electricity prices lower than in 2021
© Thorsten Schier / Adobe StockMünster (renewablepress) - Electricity prices in the German wholesale sector fell to an average of 7.95 cents/kWh in 2024 - a decrease of 16.8% compared to 2023 (9.55 cents/kWh). This is the second price drop in a row. Despite the complete nuclear phase-out, the electricity price in 2024 is even below the level of 2021 (9.66 cents/kWh), when six nuclear power plants were still in operation in Germany. This is the result of an analysis of data from the EPEX Spot Power Exchange by the Internationales Wirtschaftsforum Regenerative Energien (IWR).

The rapid rise in wholesale electricity prices between mid-2021 and the end of 2022 was the result of a historic combination of factors: the dramatic increase in gas prices due to the Russian invasion of Ukraine and the massive outage of French nuclear power plants due to maintenance delays in the wake of Covid-19 as well as voltage corrosion discovered at the end of 2021.

From mid-2021, wholesale electricity prices in Germany climbed almost threefold from 5.3 cents/kWh (May 2021) to 14.0 cents/kWh in October 2021 due to the rise in gas prices and low gas storage levels. The German gas storage facilities sold by Germany to Russia were apparently no longer replenished to the necessary extent by Russia from summer 2021 in preparation for the Russian invasion of Ukraine in February 2022.

The direct impact of rising gas prices on wholesale electricity prices is in turn linked to the type of daily pricing on the electricity exchanges. This pricing is based on a marginal cost model in which only the most expensive energy source determines the overall electricity price for everyone, even if cheaper sources are also used. “High gas prices due to empty gas storage facilities and the outage of French nuclear power plants have led to wholesale electricity prices in December 2021 being more than twice as high at 22.1 cents/kWh compared to 10.8 cents/kWh in December 2024, when no German nuclear power plants were in operation, despite six operating nuclear power plants in Germany,” says IWR head Dr. Norbert Allnoch.

The dramatic rise in wholesale electricity prices in August 2022 to a record level of 46.5 cents/kWh was also primarily due to the explosion in gas prices following the shutdown of the Nord Stream 1 gas pipeline.

The sharp rise in electricity and gas prices following the Russian invasion of Ukraine subsequently led to energy price-induced inflation, not only in Germany, the knock-on effects of which (wage price spiral) are still being felt today, despite the fact that electricity prices have since fallen sharply back to pre-crisis levels.


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Caption: Wholesale electricity prices fall for the second year in a row in 2024 - electricity prices lower than in 2021
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Caption: Development of wholesale electricity prices 2021 to 2024 in Germany
© IWR


Münster, 17 January 2025


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