The price of electricity is set by the marginal cost of the most expensive individual source - if your grid is 80% solar, 20% coal, the price you pay is the price of coal, because the solar providers can increase their prices to just below that of coal. Obviously I'm simplifying somewhat, but that's the general dynamic.
This is "by design" in the sense that it offers big subsidies to more solar generation to come online, but you won't see the biggest price cuts until the last expensive sources are pushed off the grid entirely. Because Germany's marginal source is coal, they pay way more than countries whose marginal source is gas or nuclear.
Partly because they still use coal, which is heavily taxed under the emissions trading scheme and partly because of the way electricity auctions work in most of Europe, namely every participant sells at the price offered by the highest bidder.
Spain opted out of this system and is now enjoying cheap wholesale electricity, which is fueling an industrial revival.
> This doesn't explain why Germany has so high electricity prices.
It's the main thing which does.
Say you have two energy sources, Alice Electric can deliver at €0.03/kWh but only up to 10% of your demand, while Bob Energy can deliver 200% of your demand but all units will cost €0.5/kWh.
The net result of the electricity auction, as described, is that the consumers pay Alice and Bob €0.5/kWh each, which gives Alice a €0.47/kWh profit margin and therefore lot of money to expand operations if she wants to, but until she can actually supply 100% of demand, it's priced by what Bob charges.
This doesn't explain why energy costs are higher in Germany. You have to replace the words "Alice" and "Bob" with something that is relevant to the topic at hand.
Bob is the marginal generator: the most expensive power plant that still has to run to satisfy demand in a given hour (or whatever the auction period is, I assume it's per hour).
Bob is not one single concrete thing, it's the abstract concept, anthropomorphised.
Germany's energy is expensive because the marginal generator is so expensive.
Bob is gas, here, generally. Gas is the supply of last resort pretty much everywhere. Though in Germany in particular, Alice is beginning to be big enough that the dynamic is beginning to break down; this March spot prices started to go zero or even negative at midday.
That's not how it went through. The Green party in Germany heavily pushed against nuclear energy and coal energy and for solar energy. Now nuclear has been phased out and solar is here. Energy prices have gone up. Possibly because solar is extremely expensive during the night or on overcast days, so expensive gas power plants have to be used during that time. The old nuclear and coal plants would have been cheaper than replacing them with solar and gas.
You can't really blame solar for phasing out nuclear. That was a political decision. Uranium mostly comes from Russia and China too, so it's not like it was geopolitically "safer" than gas.
> The old nuclear and coal plants would have been cheaper than replacing them with solar and gas.
Gas's share of electricity generation has not meaningfully changed in Germany since 2015. [1] It's ranged from 80 to 95 TWh. Last year it was 82 TWh.
That data also shows coal's share of generation reducing since 2022. If coal is really cheaper than solar and wind, why is Germany using less of it?
> Possibly because solar is extremely expensive during the night or on overcast days
Today gas power plants cover the shortage. As I've already showed you, Germany isn't using meaningfully more gas than it used to even during nuclear's heyday (which was in 2006, when nuclear generated 167 TWh and 74.6TWh came from gas).
Solar and batteries are already cheaper than gas in sunny climes. [2] It's only a matter of time before they're the cheapest source of nighttime power in Germany.
You're operating on information from 3 years ago and haven't changed your mind since then.
> You can't really blame solar for phasing out nuclear. That was a political decision.
You can't say solar "saves" Germany money when this is apparently not the case. You can't just selectively count the cases where solar replaced an energy source which happens to be more expensive than solar. Solar saves you money if and only if its implementation, including backups, is less expensive than what was used previously, whatever it was.
> Gas's share of electricity generation has not meaningfully changed in Germany since 2015. [1] It's ranged from 80 to 95 TWh. Last year it was 82 TWh.
What then explains Germany's high electricity prices?
> That data also shows coal's share of generation reducing since 2022. If coal is really cheaper than solar and wind, why is Germany using less of it?
Because the Greens and other environmentalists pushed for using less coal. Just like they pushed heavily against nuclear. And in favor of heavy subsidies for solar. It was a political decision, not an economical one.
> Solar and batteries are already cheaper than gas in sunny climes. [2] It's only a matter of time before they're the cheapest source of nighttime power in Germany.
Even if that report is correct (Ember is a solar energy company so that information could be heavily biased) that doesn't mean they would be cheaper than nuclear and coal would have been during the night in the past, or that switching from nuclear and coal to solar and backups didn't increase, rather than decrease, energy prices.
This is "by design" in the sense that it offers big subsidies to more solar generation to come online, but you won't see the biggest price cuts until the last expensive sources are pushed off the grid entirely. Because Germany's marginal source is coal, they pay way more than countries whose marginal source is gas or nuclear.