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German Nuclear Phase-out Policy: Effects on European Electricity Wholesale Prices, Emission Prices, Conventional Power Plant Investments and Eletricity Trade


  • Thure Traber
  • Claudia Kemfert


The German decision to finally phase-out nuclear electricity has led to a debate on its effects on electricity prices, emission prices in the European emission trading system, as well as on international electricity trade. We investigate these effects with a Electricity market model for Europe with investments in power plants under oligopolistic conditions in Germany. We find modest price increases on the German wholesale market by the mid-term 2020 and an effect of the accelerated nuclear phase- out of between four and twelve percent. Moreover, the increase in the emission allowance prices due to the change in nuclear policy is between 1:8 and 3 Euro per ton of CO2 by the same period. The large variations in our results are induced by four combinations of the European emission trading policy and the success of the German energy efficiency policy. Most pronounced price effects are found in scenarios with a successful energy savings policy, which acts as a substitute for new power plants. Moreover, the tighter the emission trading system is, the larger are the effects of the accelerated phase-out on electricity and emission prices. Under a tight system, however, investments in conventional generation are likely to be dominated by natural gas fired plants since the decrease of utilization rates induced by renewable energies are more important for coal fired power plants with their relative high investment costs.

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  • Thure Traber & Claudia Kemfert, 2012. "German Nuclear Phase-out Policy: Effects on European Electricity Wholesale Prices, Emission Prices, Conventional Power Plant Investments and Eletricity Trade," Discussion Papers of DIW Berlin 1219, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp1219

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    References listed on IDEAS

    1. James B. Bushnell & Erin T. Mansur & Celeste Saravia, 2008. "Vertical Arrangements, Market Structure, and Competition: An Analysis of Restructured US Electricity Markets," American Economic Review, American Economic Association, vol. 98(1), pages 237-266, March.
    2. Traber, Thure & Kemfert, Claudia, 2011. "Gone with the wind? -- Electricity market prices and incentives to invest in thermal power plants under increasing wind energy supply," Energy Economics, Elsevier, vol. 33(2), pages 249-256, March.
    3. Barquin, J. & Boots,M. G. & Ehrenmann, A. & Hobbs, B.F. & Neuhoff, K. & Rijkers, F. A. M., 2004. "Network-constrained models of liberalized electricity markets: the devil is in the details," Cambridge Working Papers in Economics 0405, Faculty of Economics, University of Cambridge.
    4. Michaela Fursch & Dietmar Lindenberger & Raimund Malischek & Stephan Nagl & Timo Panke & Johannes Truby, 2012. "German Nuclear Policy Reconsidered: Implications for the Electricity Market," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 3).
    5. Thure Traber & Claudia Kemfert, 2009. "Impacts of the German Support for Renewable Energy on Electricity Prices, Emissions, and Firms," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 155-178.
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    Cited by:

    1. Nagl, Stephan, 2013. "The Effect of Weather Uncertainty on the Financial Risk of Green Electricity Producers under Various Renewable Policies," EWI Working Papers 2013-15, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    2. Brigitte Knopf & Yen-Heng Henry Chen & Enrica De Cian & Hannah Förster & Amit Kanudia & Ioanna Karkatsouli & Ilkka Keppo & Tiina Koljonen & Katja Schumacher & Detlef van Vuuren, 2014. "Beyond 2020 - Strategies and Costs for Transforming the European Energy System," Working Papers 2014.15, Fondazione Eni Enrico Mattei.
    3. repec:wsi:ccexxx:v:04:y:2013:i:supp0:n:s2010007813400071 is not listed on IDEAS
    4. A. Schröder & T. Traber & C. Kemfert, 2013. "Market Driven Power Plant Investment Perspectives In Europe: Climate Policy And Technology Scenarios Until 2050 In The Model Emelie-Esy," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 4(supp0), pages 1-22.
    5. repec:wsi:ccexxx:v:04:y:2013:i:supp0:n:s2010007813400058 is not listed on IDEAS
    6. Friedrich Kunz and Hannes Weigt, 2014. "Germanys Nuclear Phase Out - A Survey of the Impact since 2011 and Outlook to 2023," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
    7. Woo, C.K. & Ho, T. & Zarnikau, J. & Olson, A. & Jones, R. & Chait, M. & Horowitz, I. & Wang, J., 2014. "Electricity-market price and nuclear power plant shutdown: Evidence from California," Energy Policy, Elsevier, vol. 73(C), pages 234-244.
    8. repec:wsi:ccexxx:v:04:y:2013:i:supp0:n:s2010007813400010 is not listed on IDEAS
    9. Chi-Keung Woo, Ira Horowitz, Jay Zarnikau, Jack Moore, Brendan Schneiderman, Tony Ho, and Eric Leung, 2016. "What Moves the Ex Post Variable Profit of Natural-Gas-Fired Generation in California?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).

    More about this item


    energy modeling; nuclear phase-out; climate policy; oligopoly;

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)

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