Germany Energy Overview
Germany witnessed a decline of 4% in electricity demand during 2022, primarily influenced by higher energy prices, public appeals to conserve energy, and an unusually mild winter. Despite this decrease, renewable power generation experienced a notable rise of 9% compared to the previous year, when it had been hampered by reduced wind speeds. Germany continued to expand its renewable capacity, with solar power installations accelerating due to private investments driven by soaring electricity prices.
During the summer of 2022, low water levels on the Rhine River disrupted the transportation of coal to power plants located along its banks, leading to a reduction in coal-fired generation during that period. Nevertheless, coal-fired power generation in Germany increased by over 10% for the second consecutive year, surpassing the levels seen in 2019. Several factors contributed to this increase. The natural gas supply shortage in Europe resulted in high gas prices, making coal a more cost-effective option for electricity generation. Additionally, the reduced availability of nuclear power plants in neighboring France led to higher imports from Germany in 2022. However, despite the recent upturn, coal-fired generation in Germany remains significantly lower (-20%) than the average observed during the period from 2015 to 2019.
To address potential energy supply shortages, Germany activated a gas replacement reserve on July 13, 2022. This reserve includes 4.3 GW of hard coal and 1.6 GW of oil-fired power plants, which were previously placed in grid reserve status until March 31, 2024. Furthermore, approximately 1.9 GW of lignite-fired capacity, originally scheduled for decommissioning by October 1, 2022, was brought back from the security readiness reserve and will remain operational until June 30, 2023. Deadlines for decommissioning an additional 2.2 GW of hard coal-fired plants and approximately 0.5 GW of hard coal capacity were extended until March 31, 2024. Moreover, 1.2 GW of lignite-fired capacity, originally slated for decommissioning by December 31, 2023, will also receive an extension until March 31, 2024.
Germany's remaining 4.1 GW of nuclear capacity, initially scheduled for shutdown at the end of 2022, was instead placed in emergency reserve, allowing operation during the winter months until April 2023. However, these plants will not be refueled, resulting in a reduced total output estimated at 5 TWh during the extension. Nuclear power accounted for approximately 6% of Germany's total electricity generation in 2022.
Looking ahead to 2023, coal-fired generation is projected to increase by an additional 4% as more reserve capacity becomes operational, while gas prices are expected to remain high. Renewable power generation is set to experience robust growth of 12%, while gas-fired generation is anticipated to decline sharply by 15%. In the following years, from 2024 to 2025, Germany aims to fully adhere to its coal phase-out plan, leading to a decline in coal-fired power generation. During this period, renewable power generation is forecast to increase significantly, driven by ambitious renewable energy targets, streamlined bureaucratic processes, and persistently high energy prices. The government aims to install a total of 38 GW of solar capacity, 19 GW of onshore wind capacity, and 3.5 GW of offshore wind capacity between 2023 and 2025. Accelerating permitting procedures and expanding the grid infrastructure will be crucial factors in achieving these targets.
While the current forecast suggests that Germany will likely remain a net exporter of electricity in 2023 following the trend of 2022, the likelihood of transitioning from a net exporter to a net importer is expected to increase significantly from 2024 onward.
During the summer of 2022, low water levels on the Rhine River disrupted the transportation of coal to power plants located along its banks, leading to a reduction in coal-fired generation during that period. Nevertheless, coal-fired power generation in Germany increased by over 10% for the second consecutive year, surpassing the levels seen in 2019. Several factors contributed to this increase. The natural gas supply shortage in Europe resulted in high gas prices, making coal a more cost-effective option for electricity generation. Additionally, the reduced availability of nuclear power plants in neighboring France led to higher imports from Germany in 2022. However, despite the recent upturn, coal-fired generation in Germany remains significantly lower (-20%) than the average observed during the period from 2015 to 2019.
To address potential energy supply shortages, Germany activated a gas replacement reserve on July 13, 2022. This reserve includes 4.3 GW of hard coal and 1.6 GW of oil-fired power plants, which were previously placed in grid reserve status until March 31, 2024. Furthermore, approximately 1.9 GW of lignite-fired capacity, originally scheduled for decommissioning by October 1, 2022, was brought back from the security readiness reserve and will remain operational until June 30, 2023. Deadlines for decommissioning an additional 2.2 GW of hard coal-fired plants and approximately 0.5 GW of hard coal capacity were extended until March 31, 2024. Moreover, 1.2 GW of lignite-fired capacity, originally slated for decommissioning by December 31, 2023, will also receive an extension until March 31, 2024.
Germany's remaining 4.1 GW of nuclear capacity, initially scheduled for shutdown at the end of 2022, was instead placed in emergency reserve, allowing operation during the winter months until April 2023. However, these plants will not be refueled, resulting in a reduced total output estimated at 5 TWh during the extension. Nuclear power accounted for approximately 6% of Germany's total electricity generation in 2022.
Looking ahead to 2023, coal-fired generation is projected to increase by an additional 4% as more reserve capacity becomes operational, while gas prices are expected to remain high. Renewable power generation is set to experience robust growth of 12%, while gas-fired generation is anticipated to decline sharply by 15%. In the following years, from 2024 to 2025, Germany aims to fully adhere to its coal phase-out plan, leading to a decline in coal-fired power generation. During this period, renewable power generation is forecast to increase significantly, driven by ambitious renewable energy targets, streamlined bureaucratic processes, and persistently high energy prices. The government aims to install a total of 38 GW of solar capacity, 19 GW of onshore wind capacity, and 3.5 GW of offshore wind capacity between 2023 and 2025. Accelerating permitting procedures and expanding the grid infrastructure will be crucial factors in achieving these targets.
While the current forecast suggests that Germany will likely remain a net exporter of electricity in 2023 following the trend of 2022, the likelihood of transitioning from a net exporter to a net importer is expected to increase significantly from 2024 onward.