Northwestern European Countries to Become Massive Net Electricity Importers Towards 2025

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Product Editorial
Nov. 7, 2018Johannes Holdø

The coming decade, Wattsight expect significant decommissioning of hard coal and nuclear capacity across Central Europe, while deployment of electric vehicles will increase power consumption. Renewables growth will fill much of this gap. We expect net exchange capacity to be significantly strengthened, and we expect strong net exports from Germany & Nordic Countries to Belgium, Netherlands & UK.

In Wattsight’s recently published report ‘Long-term Price Forecast for Electric Power in Central Europe 2018-2045’, a major finding is that closures of nuclear plants in Belgium and UK, and a carbon price floor in the Netherlands, will lead to increased imports to this area over the next decade. 

Also, during the coming decade we expect to see strong expansions of net exchange capacity. Our assessments suggest Germany to nearly doubling its export capacity, while the UK will nearly triple its import capacity. Based on our simulations, this will eventually lead to somewhat fewer price differences in Europe than currently. 

Germany will soon face a major decision on its long-term dependency on coal power, as its appointed ‘Coal Commission’ will unveil its recommendation. Hard coal and lignite-fired power plant closures are necessary in order to cut long-term GHG emissions of significance, as Germany is still being way off its 2020 Energiewende target of cutting emissions by 40%. 

Although the government reiterated its commitment to a 55% GHG reduction target for 2030 earlier this year, we expect Germany to find it difficult to phase out power generation from solid fuels, partly because of its nuclear phase-outs, where nuclear power generation of currently some 75 TWh/year is to be phased out within a few years. We assume that nearly half of all German hard coal and lignite capacity has closed by 2030, due to forced closures and in some cases due to having reached its technical lifetime.     

For year, 2020, applying an EUA forecast of 19 €/t and a coal price forecast of 86 $/t, Wattsight simulate average prices in Germany, Netherlands, and France at 48 €/MWh, 49 €/MWh and 53 €/MWh, respectively (in real 2018 euros). By 2025, these prices have risen to 51 €/MWh for Germany, 52 €/MWh for the Netherlands and 54 €/MWh for France.

About the Report

In November, Wattsight introduced a long-term outlook on power balances and power prices for Central Europe for the years 2018-2045. The report will among other topics provide customers with a unique insight into policy backgrounds and forecasts/assumptions on fuel and carbon prices. By applying these in a detailed price modelling tool, we provide long-term power balances and power prices.

Quotes

  •  ‘Germany has reiterated its 55% GHG reduction target for 2030. The target appears to be extremely ambitious – for a country that is inevitably going to miss its initial 2020 GHG target by far; with weak reductions in coal power emissions the last years, and with a trend of marginally rising transport emissions. We expect the target to eventually becoming abandoned.’ - Espen Andreassen, Senior Analyst, Wattsight
  • ‘We see that some major Northwestern European countries are exposing themselves to become electricity net importers – counting on other countries for their power supply.’ - Olav Botnen, Senior Analyst, Wattsight
  •  ‘A lot of nukes in Central Europe are to face closure in the early twenties. Still, EU lawmakers have paved the way for massive renewables expansions, offsetting this – our offshore wind capacity inventories show quite a boost.’ - Eylert Ellefsen, Head of Continental Power Analysis

Get in touch with Senior Analyst Espen Andreassen (+47 47 40 90 62 / ean@wattsight.com) for more information.

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