- Missing energy transition targets could increase power prices by 50%
- High price volatility is expected to persist long-term
- Power consumption in Europe is expected to rise by more than 50% by 2040
New analysis published by Montel Analytics shows that power prices could jump by 50% across Europe if countries fail to meet their stated goals for decarbonisation. This highlights just how crucial the expansion of renewable energy is for the affordability of power in the coming decades.
The latest update to Montel Analytics’ EU Energy Outlook show that average European power prices could reach approximately €100/MWh by 2060 if the expansion of renewable energy is delayed and the use of coal and gas power plants is prolonged.
This represents a significant increase on the €65/MWh price level suggested by the analysis should all green transition targets be met. These developments strongly emphasise the need to implement strategies to integrate price signals into electricity demand.
Meanwhile, the number of hours where power prices are negative are expected to start decreasing in the 2030s. However, this will also see the number of hours with very low positive prices rise substantially. This will mainly be driven by growing power demand – expected to rise by over 50% – due to an increase in flexible consumption devices, such as electrolysers, heat pumps, and electric vehicles. This highlights the need to implement strategies for integrating price signals into power demand.
Flexible consumption devices that respond to price signals are expected to account for about one-third of total power consumption by 2050. Their power demand will grow from virtually zero today to around 2000 TWh/year by 2060.
Matthis Brinkhaus, Senior Analyst at Montel said: “The findings underscore the importance of an ambitious expansion of renewable energy to meet energy transition targets while keeping power prices affordable for consumers and businesses. Delays in expansion could have severe economic and ecological consequences.”
The full white paper “EU Energy Outlook 2060” is also attached for information.
About Montel Analytics’ EU Energy Outlook 2060
The calculations are based on the Power2Sim fundamental energy market model, which has been continuously developed for more than 15 years. Power2Sim performs hourly modelling and incorporates fundamental interrelations and assumptions across all European countries. These include power demand, power plant capacities, fuel prices, interconnector capacities, and meteorology.
The power price scenarios provide projections for annual base and peak load power prices. These are used as a basis for investment decisions, evaluating power plants and contracts, energy procurement and production planning.
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Simon White
Head of Communications
Email: Simon.white@montel.energy
Phone: +447951 031701
