Electricity prices in the EU, a tale of four countries: the price of political correctness II

Denmark and Germany have the highest household electricity prices in the OECD. France and Finland have prices that are in the lower 17 of the OECD’s 34 countries. It wasn’t always that way. As you can see in the chart and table below—both based on recently published OECD data—Denmark, Germany, and France had very similar prices up to about 1990 (Finland’s prices were cheaper than France’s up to about 2008). But after 1990, and especially after 2000, very significant differences emerged. As you can see, Danish and German electricity prices skyrocketed after 2000; French and Finn prices rose only slightly. (I give the actual figures on which the chart is based in a table at the bottom of this article.)

The price of politically correct electricity in the EU. Germans and Danes pay the highest prices; French and Finns pay among the lowest. French and Finns get cheaper power, and it is cleaner too. Source: OECD Electricity Information 2013, p. III.58. Click on image to enlarge.

The price of politically correct electricity in the EU. Germans and Danes pay the highest prices; French and Finns pay among the lowest. French and Finns get cheaper power, and it is cleaner too. Source: OECD Electricity Information 2013, p. III.58. Click on image to enlarge.

There are very good reasons for these price differences, and they have everything to do with these countries’ different responses to the phenomenon of anthropogenic climate change.

So: why the big price differences, and especially after 2000? Denmark and Germany, reflecting the fashion of the time in environmental policy advocacy, put huge amounts of wind and solar into their systems. Both wind and solar are unreliable, and owners of generators using wind and solar therefore require high prices just to keep from going out of business. The only way to give wind and solar owners those high prices is to force rate payers to pay them, which is what happened in Denmark and Germany.

France stayed more or less put: France, by conscious choice, went nuclear in a big way during the 1970s. It got more than 75 percent of its power in 2012 from nuclear (Electricity Information 2013, p. IV.305), and is today the second biggest electricity exporter in the EU; Germany is the biggest (p. III.24).

Don’t be fooled by Germany’s very slight downward trend since 2004. The chart ends at 2010. Germany has pulled most of its zero-carbon nuclear fleet out of service, and carbon emissions have spiked up as a result. Click to enlarge

Don’t be fooled by Germany’s very slight downward trend since 2004. The chart ends at 2010. Germany has pulled most of its zero-carbon nuclear fleet out of service, and carbon emissions have spiked up as a result. Click to enlarge

Finland did not bother with much wind and solar. It gets most of its power from a mix of the usual three sources: combustible fuels (29.8 billion kWh, or 42.3 percent of the total), nuclear (23 billion, or 32.6 percent), and hydro (16.8 billion, or 23.8 percent). See Electricity Information 2013, p. IV.287.

France by any standard has a very clean power system. Finland has a relatively clean one. Both Denmark and Germany are dirty by comparison with either France or Finland. Have a look at the chart to the right; it gives the carbon intensity per kilowatt-hour (CIPK) of each of these countries since 1990. Figures are from “IEA Statistics: CO2 Emissions from Fuel Combustion, 2012”, p. 111.”

What is the CIPK, and how is it calculated?
CIPK stands for CO2 Intensity Per Kilowatt-hour. It is a measure of the carbon content of a kilowatt hour of grid electricity.

The CIPK of a given grid is simply the amount of CO2 emitted by the generating plants that feed the grid with electricity, divided by the total amount of electricity fed, over a given hour. Of course, you have to know both of these figures.

Here is how to calculate Ontario’s grid CIPK. You need to refer to Table 1, in the upper left-hand sidebar on this page. Table 1 gives the current Ontario grid generation mix, and the CO2 emissions associated with the emitting fuel types.

  1. Go to the Total row in Table 1.
  2. Take the figure from the CO2, tons column.
  3. While still in the Total row, now take the figure in the MWh column.
  4. Divide the CO2, tons figure by the MWh figure.
  5. Multiply that result by 1,000. This converts tons-per-megawatt-hour into grams per kilowatt-hour.

Try it!

The upshot is, Frenchmen/Frenchwomen and Finns get clean power at cheap rates. Danes and Germans pay through the nose for dirty power.

Who got the good deal? And which countries should be followed as examples?

Here is the same OECD household price data on which the first chart is based:

Household electricity prices, U.S. $ per MWh

 DenmarkGermanyFranceFinland
197867.89985.39480.52357.742
1980101.583100.538114.1369.329
1990164.474163.801150.12102.799
2000197.441120.645101.65977.788
2007344.143263.151156.438145.377
2008396.058322.807164.327172.405
2009364.78317.866159.211173.729
2010356.292318.742165.279175.391
2011409.169351.955187.09213.615
2012383.426338.753174.767194.867

0 0 vote
Article Rating
Subscribe
Notify of
7 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Bas
6 years ago

Steve,
The big rise is because Germany, Denmark and others introduced substantial energy tax. The idea is that such tax would stimulate citizens to save energy and hence the earth. Which worked as the consumption in Germany goes down.

Until 2010 the levy because of the wind turbines and solar was only €2-3cent/KWh. Since then the amount of wind+solar grew substantially and the levy accordingly to ~€4-5cent/KWh.

The Netherlands introduced the energy tax as well, so here we also have a high price (€22cent/KWh), despite hardly any green / renewable policy.

Bas
6 years ago
Reply to  Steve Aplin

Steve,
The German electricity whole sale price is the lowest in Europe (~4cent/KWh). That is the price for which power plants have to sell their electricity. UK prices are even higher than in Netherlands. We now export electricity to UK which we buy in Germany.

We stopped building new power plants here in NL, as those cannot compete against those German prices. Especially since expectation is that those prices will go down more with the introduction in Germany of more wind turbines and PV-panels (the futures for 2015/16 are at 3cent levels).

The electricity energy tax is not used for buying (dirty) power or subsidy for wind or solar, not even for any energy related issue. The tax is used for general government spending, just as income tax. And the tax is not paid by the utilities / producers but by consumers and small business only.

One can object against that tax, but then government has to rise another tax. I propose €10/liter (~US$40/gallon) on car fuel as that pollutes far worse than any power plant here in NL. Those power plants have advanced filters and the new circulating fluidized bed plants have over-oxidized low temperature burning, which imply they hardly produce any toxic.

So I do not see your relation between high price and dirty electricity. If anything, one can only state that the competition between power plant operators (utilities) promote the cheapest possible production, hence with more pollution (if possible as that is rather strong regulated here).

That power plant competition design is an EU decision (highly promoted by UK). It has nothing to do with the Energiewende.

Bas
6 years ago
Reply to  Steve Aplin

Btw.
There were plans to build a new nuclear plant here in NL. But the builders RWE/Areva wanted to much subsidy. When our government refused that, they withdrew with the argument that their new nuclear power plant could not compete in the present and future market (happened ~2years ago).

Aldyen Donnelly
6 years ago

The prices in this article do not include the costs of transmission capacity, electricity taxes and other fees and levies that are included in monthly electricity bills. These other costs should be included because renewables policies drive up transmission costs. When one accounts for these additional, often policy-driven costs, the average household in Germany or Denmark is looking a prices that are a little under double the prices included I. This article. For a complete price + tax dataset! look to the Eurostat database.

Aldyen Donnelly
6 years ago

Also, when you look at the Eurostat database, note how heavily electricity rates for large, energy-intensive industry are discounted, relative to residential and small business (“domestic”) rates. In many (not all) EU nations, 100% of the cost of carbon and renewable energy policies has been shifted to households, small business’s non-profit and government agencies, while governments have held power prices down for high-emitting industry. This has been done through a combination of free CO2 quota (“allowance”) allocations, industrial energy tax exemptions and wholesale energy price manipulation to protect large energy-intensive industry from cost increases.