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The impact of the shutdown of German nuclear power plants on Central European pricesPublished: 1 of September, 2011

The nuclear energy policy of Germany has undergone a sea change, causing serious upheaval on European markets. Many studies have been written about the consequences of the phase-out, but most of them focused on German system security, and what effect the phase-out will have on wholesale electricity prices. What started out as a nearly 8.4 GW temporary reduction in generating capacity in March, and became a permanent reduction of 8.4 GW in June caused significant price increase in wholesale electricity futures prices in Hungary. Our study looks at the possible causes, and the mechanism of the price increase. First we draw up a supply curve reflecting German power plant capacities and the cost of generation, and show what consequences the reduction of nuclear power sources have had on the wholesale electricity price in Germany. After that we briefly look at how the decision about the shutdown affected Central European wholesale markets, and then look at its short-term effects on Germany and Hungary through the development of cross-border flows.