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Analysis Energy

Supply of sustainable electricity depresses the price

15 February 2022 - Jurphaas Lugtenburg

Favorable conditions for wind turbines and solar panels have resulted in a wide supply of electricity in recent days. Green electricity is a cheaper option due to the high gas and coal prices. It is not surprising that the German government is taking that momentum to present the ambitious plans for the expansion of solar parks.

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The electricity market showed relatively few price spikes last week. On Thursday, February 10, the EPEX Spot quotation recorded the highest price in seven days, at €188,56 per MWh. The quotation fell to €13 per MWh on Sunday, February 137,04. On Monday February 14, the electricity price increased to €175,76 per MWh. This makes this the second week in a row in which the electricity price remains below €200 per MWh.

The fact that the price is at a somewhat lower level - although this is still three times higher than last year - is mainly due to the supply of electricity generated from sun and wind. Sufficient wind ensures that the wind turbines work well and the lengthening of the days is noticeable in the energy production of solar panels. If the supply of green energy is disappointing, energy companies must fall back on electricity from conventional power stations, the basic price of which is relatively high. This is due to expensive gas, coal and emission rights. For comparison: the price for coal stood at $14 per ton on February 194, compared to $65,20 per ton one year earlier.

German green ambitions
The German government presented plans last week to expand the number of solar panels. The ministers of the Ministry of Economy and Climate Protection and those of the Ministry of Environment and Agriculture - both from die Grüne - have agreed on this. To achieve the target (that 80% of the electricity used is sustainable), the German government is investing heavily in solar and wind farms. This should not be at the expense of nature, according to the government. The priority is therefore to install panels in the built environment.

But the construction of solar parks on agricultural land is also explicitly mentioned as an option, whether or not in combination with agricultural use for the soil under the panels. Up to 15% of the area per company must be able to be used for solar panels, without this affecting the CAP funds. Protected areas, grassland, arable land relevant for nature conservation and heathlands should be excluded for nature conservation and climate protection reasons.

The German farmers' association DBV is extremely critical of the government's plans. "The proposal does not sufficiently take into account the interests of agriculture," writes Secretary General Bernhard Krüsken. A general exclusion of grassland and protected areas leads to the most productive fields being overgrown with photovoltaic cells. “It is not sustainable. When choosing a location it is imperative to take agro-structural considerations into account.”

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