Germany's Nuclear Phase-out: Sensitivities and Impacts on Electricity Prices and C[O.sub.2] Emissions

• Published in: Economics of energy & environmental policy 2014-03, Vol.3 (1), p.89
• Main Authors: Knopf, Brigitte, Pahle, Michael, Kondziella, Hendrik, Joas, Fabian, Edenhofer, Ottmar, Bruckner, Thomas
• Format: Article
• Language: English
• Subjects: Alternative energy sources; Electric power; Emissions (Pollution); Laws, regulations and rules; Nuclear energy; Prices and rates
• ISSN: 2160-5882
• DOI: 10.5547/2160-5890.3.1.bkno

Following the nuclear meltdown in Fukushima Daiichi, in summer 2011 the German parliament decided to phase-out nuclear power by 2022. When this decision was taken, a number of model-based analyses investigated the influence this decision would have on electricity prices and C[O.sub.2] emissions. They concluded that C[O.sub.2] emissions would be kept at levels that are in line with national reduction targets but that the phase-out would result in an increase in wholesale electricity prices. We show by means of a sensitivity analysis that results crucially hinge on some fundamental model assumptions. These particularly include the development of fossil fuel and C[O.sub.2] prices, which have a much larger influence on the electricity price than the nuclear phase-out itself. Since the decision of the nuclear phase-out, C[O.sub.2] prices have decreased and deployment of renewables increased ever since. This partly counteracts the negative effect of the nuclear phase-out on electricity prices, but on the other hand challenges the mitigation of C[O.sub.2] emissions and security of supply. This underlines the importance of sensitivity analyses and suggests that policy-makers need to consider scenarios that analyze the whole range of possible future developments. Keywords: Nuclear policy, Climate protection, Renewable energy, Electricity market modeling, Energiewende