DBR expects German peak power demand to be flat this year and to contract in 2013 by two percent before reverting to annualized growth of 0.25 percent from 2014 onwards.

In June, it had forecast demand growth between 2013 and 2015 of 0.75 percent per annum.

In its latest research, it said the market will probably see significant closures of older fossil-fuels plants due to lower demand and not least as generators under EU law have to start paying for 100 percent of their carbon allowances from 2013.

But because high levels of renewable units would also be commissioned under Germany's drive to move towards low or no carbon generation, there would be an addition of net capacity amounting to 21.5 gigawatt (GW) over the 2011-2015 period.

DBR cut its forecast for German baseload and peakload power forwards made in June by 2-3 euros a megawatt hour for 2012 through to 2015.

Delivery of baseload refers to 24-hour supply while peakload is that between 0800 and 2000 hours on weekdays.

The DBR sees baseload power in 2012 at 42.8 euros ($55.0)/MWh versus 44.9 euros in June, and 2013 delivery at 49.7 euros/MWh compared with 51.60 euros/MWh previously.

DBR has introduced a new forecast for prices achieved by what it calls peaking units, fossil fuels based generation units that run during peakload times to make up for supply gaps should renewable power units not be producing at the time.

Their prices would be on average 7-8 euros/MWh above peakload prices in 2012-15, DBR said.

These units have to charge higher prices in order to sustain overall profitability because they have to spread operating costs over fewer hours. This is because green power is treated preferentially and must be bought whenever it is produced.

(Reporting by Vera Eckert; editing by James Jukwey)

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