Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/272301 
Authors: 
Year of Publication: 
2023
Series/Report no.: 
ifo Working Paper No. 394
Publisher: 
ifo Institute - Leibniz Institute for Economic Research at the University of Munich, Munich
Abstract: 
European energy crisis has three elements: skyrocketing prices for energy carriers such as natural gas, coal, as well as electricity, reduced nuclear power plant availability in France, and lower hydro power generation in Europe. This paper decomposes the effects of those elements on power markets and the EU ETS. Permanently higher natural gas prices reduce the canceling volume in the MSR by 425 million and prevent gas-CCS from being competitive in the long-run. Electricity prices are almost unaffected because gas-CCS is substituted by similarly competitive nuclear. Half of the 2022 European electricity price increase can be traced back to higher energy prices (from 36 to 143 e/MWh), whereas the other half (from 143 to 247 e/MWh) comes from French nuclear and European hydro problems. The decision to stretch the operation of three German nuclear power plants to counteract against those crises brings down European (German) electricity prices by 0.89% (2.47%) in 2023. Extending them for seven years after stretching, starting from September 2023, brings down electricity prices by 1.88% (4.8%) in 2024.
Subjects: 
Electricity prices
natural gas prices
coal prices
nuclear power
hydro power
EU ETS
market stability reserve
power market modeling
intertemporal optimization
JEL: 
C61
H21
H23
L94
Q41
Document Type: 
Working Paper

Files in This Item:
File
Size
381.81 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.