Power prices are likely to keep rising in Germany as Chancellor Angela Merkel’s government mandates further closures for coal and nuclear power plants, the nation’s biggest electricity generator said.

Markus Krebber on June 13.
Photographer: Krisztian Bocsi/Bloomberg

Markus Krebber, chief financial officer of RWE AG, said the difference between supply and demand will get increasingly tight by the early 2020s, opening the possibility of routine price spikes. Benchmark rates have already doubled since a low in early 2016.

Merkel’s government is phasing out the most polluting coal facilities at the same time as it ordered utilities to close nuclear power stations following a catastrophic meltdown of...