A vision of the European energy future? The impact of the German response to the Fukushima earthquake

Luigi Grossi, Sven Heim and Michael Waterson

No 14-051, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: The German response to the Fukushima nuclear power plant incident was possibly the most significant change of policy towards nuclear power outside Japan, leading to a sudden and very significant shift in the underlying power generation structure in Germany. This provides a very useful natural experiment on the impact of increasing proportions of renewable compared to conventional fuel inputs into power production, helping us to see how changed proportions in future as a result of policy moves in favour of renewables are likely to impact. We find through quasi-experimental exploration of a modified demand-supply framework that despite the swift, unpredicted change, the main impact was a significant increase in prices, partly caused by more frequent situations with unilateral market power. The price impact was also most significant in off-peak hours, leading to changed investment incentives. There were no appreciable quantity effects on the market, such as power outages, contrary to some views that the impacts would be significant. Furthermore, we find the sudden and unilateral phase-out decision by the German government has significantly affected electricity prices and thus competitiveness in neighbouring countries.

Keywords: electricity markets; Atomausstieg; German power market; nuclear outages; renewables (search for similar items in EconPapers)
JEL-codes: L51 L94 Q41 Q48 Q54 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-ene and nep-eur
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Working Paper: A vision of the European energy future? The impact of the German response to the Fukushima earthquake (2014)
Working Paper: A vision of the European energy future? The impact of the German response to the Fukushima earthquake (2014)
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