A new analysis published by Montel Analytics, part of Norway-headed energy intelligence service provider Montel AS, shows that power prices could jump by 50 percent across Europe if EU member States fail to meet their stated goals for decarbonization. This highlights just how crucial the expansion of renewable energy is for the affordability of power in the coming decades.
The latest update to Montel Analytics’ EU Energy Outlook 2060 shows that average European power prices could reach approximately EUR 100 per MWh by 2060 if the expansion of renewable power is delayed and the use of coal and gas power plants is prolonged.
This represents a significant increase on the EUR 65/MWh price level suggested by the analysis should all green transition targets be met.
According to the study, these developments strongly emphasize the need to implement strategies to integrate price signals into electricity demand.
Meanwhile, the number of hours in which power prices are negative is expected to start decreasing in the 2030s. However, this will also see the number of hours with very low positive prices rise substantially.
This will mainly be driven by growing power demand – expected to rise by over 50 percent – due to an increase in flexible consumption devices, such as electrolyzers, heat pumps, and electric vehicles (EVs).
This, the study suggests, highlights the need to implement strategies for integrating price signals into power demand.
Flexible consumption devices that respond to price signals are expected to account for about one-third of total power consumption by 2050.
Their power demand will grow from virtually zero today to around 2,000 TWh/year by 2060.
The findings underscore the importance of an ambitious expansion of renewable energy to meet energy transition targets while keeping power prices affordable for consumers and businesses. Delays in expansion could have severe economic and ecological consequences, commented Matthis Brinkhaus, Senior Analyst at Montel.
The calculations in the study are based on the Power2Sim fundamental energy market model, which has been continuously developed for more than 15 years. Power2Sim performs hourly modeling and incorporates fundamental interrelations and assumptions across all European countries. These include power demand, power plant capacities, fuel prices, interconnector capacities, and meteorology.
The power price scenarios provide projections for annual base and peak load power prices. These are used as a basis for investment decisions, evaluating power plants and contracts, energy procurement, and production planning.
