German coal phase-out likely to make renewables more competitive than fossil fuels – ICIS analysis

17 September 2018

17 September, 2018

London and Karlsrue, 17 September 2018 – The upcoming meeting of Germany’s coal commission on 18 September 2018 – an expert committee tasked with putting forward a timeline for exiting coal generation within a socially acceptable framework – is the next step towards a changing power market landscape in Europe.

In order to simulate the impact of four coal phase-out scenarios and their impact on German power prices and CO2 emissions towards 2030, ICIS energy analytics team utilises the ICIS Power Horizon model that has been launched today (17 September 2018). The results from the model have been published in an ICIS analysis report on 17 September.

“Our models show that a German coal phase-out has the potential to significantly increase German spot power prices to levels between €55/MWh and €60/MWh through to 2023,” says Marcus Ferdinand, Head of EU Power and Carbon Analytics at ICIS and the author of the analysis report.”

The report shows that depending on the speed of the phase-out, German power prices would then correct downwards towards 2030, factoring in lower carbon prices and renewable capacity growth.

“The expected power price increase is a result of reduced overcapacity coupled with an expected increase in the European carbon price, which will be an incubator for fostering additional investments in renewable energy sources in Germany,” Ferdinand adds.

In addition, the ICIS Power Horizon model shows that a rapid phase-out of coal and lignite capacities has the potential to create supply shortages during times of high demand and low renewable generation, leading to significant price spikes during certain hours of the year.

“The frequency and magnitude of these spikes grows over time in scenarios where coal and lignite capacity is reduced at rapid pace,” Ferdinand states.

The report concludes that due to rising EUA prices, German coal and lignite generation will likely decrease significantly over the next five years irrespective of the pathway chosen towards the long-term phase-out.

“As EUA prices begin to soften in line with our expectations, the chosen phase-out pathway will play a significant role in determining German power prices from 2023 onwards, as well as the level of long-term carbon emissions,” according to Ferdinand.

The scenario-based report is part of the ICIS Power Horizon product – a power price forecast working with advanced linear optimisation in order to predict the impact of regulatory decisions and cross-border market developments on the power price.

“In times when decisions like coal phase-outs, renewable energy subsidy changes, implementation of capacity markets, and other developments are increasingly affecting power markets all over Europe, regulation and policy changes have become a key interest of analysts, traders, investors and strategic departments,” explains Philipp Ruf, Director Power & Carbon Analytics at ICIS.

“That is the key driver behind the development of ICIS Power Horizon as we believe regulatory decisions and policy developments have become the number one risk for investors and traders alike. With our services, we want to support market participants to assess such risks thoroughly by being able to quantify the effects of such changes.”

To access the scenario-based ICIS analysis report on German coal phase-out scenarios, please click here.

Figure: ICIS German power price forecast 2018-2030 [in €/MWh]

Download the insight paper

Media contacts

For the German coal phase-out analysis
Marcus Ferdinand
Head of EU Power & Carbon Analytics

Direct: +49 (0) 721 205 96 29 26

For Power Horizon and ICIS energy analytics strategy
Philipp Ruf
Director of Global Power & Carbon Analytics

Direct: +49 (0) 721 205 96 29 13

About ICIS Power Horizon

Running on a super-fast cloud, the modelling technique allows for quick analytical reactions. A regulator’s statement or market development in the morning can be translated into its price impact potential in the early afternoon.

The pan-European forecasting solution is intertwined with a European-wide power-market analysis team, powered by over 30 analysts and journalists.

This tool allows the user full flexibility on the impact of market developments on hourly power prices out to 2030. One of the first tasks of the model was to predict the impact on prices of potential decisions of the German Coal Phase Commission, which is set to meet on 18 September 2018.

If you would like to try the ICIS Power Horizon solution for free, please contact Justin Banrey (; Direct: +44 207 911 1939)

About ICIS 

ICIS is the world’s largest petrochemical market information provider, with divisions spanning energy and fertilizers. Our aim is to give companies in global commodities markets a competitive advantage by delivering valuable information and analytics tools which enable our customers to identify and react to opportunities in markets which are constantly evolving. We have more than 30 years’ experience of providing pricing intelligence and news, forecast data, market analytics and independent consulting to buyers, sellers and analysts.

With a global staff of more than 600, ICIS has employees based in London, Houston, New York, Singapore, Dubai, Shanghai, Guangzhou, Beijing, Mumbai, Tokyo, Karlsruhe, and Milan. ICIS’s team of journalists is engaged in reporting market prices and news, and ICIS is fully committed to upholding the highest journalistic principles of verification, corroboration and authentication. ICIS has a compliance framework that along with its methodologies and business processes adheres to the requirements of the IOSCO PRA Principles.

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