Germany’s power market revenue cap — what does it hold for power generation assets?

During the past months, the ongoing energy crisis in Europe has led to unprecedented levels of power prices. While governments across Europe are stepping up their financial support for end consumers, windfall profits of low-marginal-cost power producers have become a target for policymakers aiming to refinance government support measures.

In this context, the European Union adopted a maximum cap of 180 EUR/MWh for power market revenues of inframarginal generators, which will apply from 1 December 2022 to 30 June 2023. Following through on the new EU regulation, the German government aims to introduce even lower technology-specific revenue caps.

Access these slides for analysis on the German government’s plans and the impact this will have on different power generation assets. The slides address the following questions:

  • How will Germany’s power market revenue cap differ from the EU regulation?
  • How will renewables assets be impacted by the cap?
  • What are the implications for asset profitability and future buildout?

 

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