Current energy market incentivises renewable energies, the Professor of Energy Politics says in the WirtschaftsWoche format.
On the current energy market, consumers are feeling the strain of prices that have increased by one-third, while production companies are making profits. In the latest episode of WirtschaftsWoche Podcast High Voltage from 10 August, Hertie School Professor of Energy Policy Lion Hirth sheds light on the mechanisms behind this apparent imbalance.
“Whenever gas-fired power plants are needed, the price of electricity on the exchanges rises sharply. This means that during these hours the price of electricity is much higher,” he says. “Plants such as wind or solar parks that do not have fuel costs benefit from these prices – they earn more without having higher costs,” the Professor at the Centre for Sustainability adds.
According to the expert, another reason for increased energy prices lies in the so-called merit order principle. “The principle explains how prices are formed from goods. In the case of gas prices, the entity with the highest production price sets the general price on the market, as producers with fewer production costs are aware they can earn equally,” Hirth comments. The principle could also have positive effects on the green energy transition, as they are currently the cheaper way to generate energy, he says.
Listen to the whole episode (in German).
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More about our expert
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Lion Hirth, Professor of Energy Policy