Dec 16, 2024
Germany investigates suspected market manipulation during the power price surge caused by Dunkelflaute.
A sudden and significant surge in electricity prices on a day with minimal wind and solar energy production in Germany has led the country's grid regulator to probe potential market manipulation. Fossil backup plants, intended to support during 'Dunkelflaute' periods, were not utilized effectively, contributing to the price hikes. Increased demand for power imports into Germany prompted a member of the Swedish government to attribute rising prices in Sweden to Germany's energy policy.
In response to an extreme spike in electricity prices on December 12, Germany's Federal Network Agency (BNetzA) announced it would investigate potential market manipulation that may have played a role in this situation. BNetzA's chief, Klaus Müller, stated in a social media update that the regulator was taking the price surge 'very seriously' and was examining claims of market manipulation. Müller emphasized the need for investment in controllable capacity and flexibility in Germany.
Market manipulation may occur if companies withhold backup plant capacity to drive up electricity prices. During a 'Dunkelflaute' event last week, when wind and solar output was significantly low, intraday power prices suddenly exceeded 900 euros per megawatt hour (MWh). The lack of availability of fossil fuel plants contributed to the price surge in Germany and other European nations.
The BNetzA stated in an analysis that 'power supply security has not been at risk at any point in time.' However, it noted that operators had not activated backup power plants even when short-term wholesale prices surpassed 300 euros per MWh. While price spikes are generally anticipated during 'Dunkelflaute' events, the regulator and power exchange operators will investigate whether there was collusion related to the price increase in mid-December. The BNetzA said, 'If there are relevant leads, we will initiate further investigations.'
Most electricity consumers remain unaffected by these price increases due to long-term fixed-rate contracts, although industrial consumers with flexible contracts may feel the impact. The agency warned that a recurrence of the price hikes seen in mid-December could happen in the forthcoming weeks, even though the Christmas holidays are expected to lower power demand. The BNetzA reiterated the urgent need for regulatory measures to facilitate the development of controllable power plants.
Swedish Minister Attributes Price Spike to Germany's Energy Policy
On December 12, a sharp increase in power prices also occurred in Sweden, prompting the country's energy minister, Ebba Busch, to hold Germany's energy policy and the phase-out of nuclear power accountable for the price surge in both Sweden and the EU. 'I'm furious with the Germans,' Busch expressed, according to news source Euractiv. As Germany is allowed to import electricity from Sweden during periods of low domestic production, the demand increase resulted in rising prices in Sweden. Busch argued that Germany's energy policy 'has had very serious consequences' for her nation.
Germany’s economy ministry responded in a social media post, stating that the EU's internal energy market aims to enhance overall efficiency across Europe through imports and exports that ultimately benefit consumers in the region. 'During certain times of the year, Sweden benefits from our wind power capacity and buys inexpensive German renewable energy. When there is little wind, we import electricity from Sweden's hydro storage plants. That is how electricity trading works,' the ministry explained.
Furthermore, Sweden and Germany have a relatively limited direct electricity trading capacity with a 600 MW power interconnector, and the pricing area in southern Sweden linked to Germany has minimal plant capacity. 'Power prices in Sweden are primarily determined by domestic factors,' such as local infrastructure and demand, the German ministry mentioned.
An analysis by the BNetzA of wholesale power prices from 2021 until the price hike on December 12 indicated that price levels varied between Germany and its neighbors throughout the year. The Nordic countries—Sweden, Norway, and Denmark—often experienced lower prices compared to Germany, whereas eastern and southern neighbors, including Poland, Czechia, Austria, and Switzerland, frequently had higher prices. There was no clear trend regarding Germany's western neighbors, France, Belgium, and the Netherlands.
In response to an extreme spike in electricity prices on December 12, Germany's Federal Network Agency (BNetzA) announced it would investigate potential market manipulation that may have played a role in this situation. BNetzA's chief, Klaus Müller, stated in a social media update that the regulator was taking the price surge 'very seriously' and was examining claims of market manipulation. Müller emphasized the need for investment in controllable capacity and flexibility in Germany.
Market manipulation may occur if companies withhold backup plant capacity to drive up electricity prices. During a 'Dunkelflaute' event last week, when wind and solar output was significantly low, intraday power prices suddenly exceeded 900 euros per megawatt hour (MWh). The lack of availability of fossil fuel plants contributed to the price surge in Germany and other European nations.
The BNetzA stated in an analysis that 'power supply security has not been at risk at any point in time.' However, it noted that operators had not activated backup power plants even when short-term wholesale prices surpassed 300 euros per MWh. While price spikes are generally anticipated during 'Dunkelflaute' events, the regulator and power exchange operators will investigate whether there was collusion related to the price increase in mid-December. The BNetzA said, 'If there are relevant leads, we will initiate further investigations.'
Most electricity consumers remain unaffected by these price increases due to long-term fixed-rate contracts, although industrial consumers with flexible contracts may feel the impact. The agency warned that a recurrence of the price hikes seen in mid-December could happen in the forthcoming weeks, even though the Christmas holidays are expected to lower power demand. The BNetzA reiterated the urgent need for regulatory measures to facilitate the development of controllable power plants.
Swedish Minister Attributes Price Spike to Germany's Energy Policy
On December 12, a sharp increase in power prices also occurred in Sweden, prompting the country's energy minister, Ebba Busch, to hold Germany's energy policy and the phase-out of nuclear power accountable for the price surge in both Sweden and the EU. 'I'm furious with the Germans,' Busch expressed, according to news source Euractiv. As Germany is allowed to import electricity from Sweden during periods of low domestic production, the demand increase resulted in rising prices in Sweden. Busch argued that Germany's energy policy 'has had very serious consequences' for her nation.
Germany’s economy ministry responded in a social media post, stating that the EU's internal energy market aims to enhance overall efficiency across Europe through imports and exports that ultimately benefit consumers in the region. 'During certain times of the year, Sweden benefits from our wind power capacity and buys inexpensive German renewable energy. When there is little wind, we import electricity from Sweden's hydro storage plants. That is how electricity trading works,' the ministry explained.
Furthermore, Sweden and Germany have a relatively limited direct electricity trading capacity with a 600 MW power interconnector, and the pricing area in southern Sweden linked to Germany has minimal plant capacity. 'Power prices in Sweden are primarily determined by domestic factors,' such as local infrastructure and demand, the German ministry mentioned.
An analysis by the BNetzA of wholesale power prices from 2021 until the price hike on December 12 indicated that price levels varied between Germany and its neighbors throughout the year. The Nordic countries—Sweden, Norway, and Denmark—often experienced lower prices compared to Germany, whereas eastern and southern neighbors, including Poland, Czechia, Austria, and Switzerland, frequently had higher prices. There was no clear trend regarding Germany's western neighbors, France, Belgium, and the Netherlands.