Electricity prices shot up this week. But was that really due too little sun and no wind? Investigations are ongoing. What the situation reveals about the German network.
Little sun, little wind and electricity prices are already skyrocketing? At first glance, that’s exactly what it looked like on Thursday. But the description is not that simple,say experts. The Federal Network Agency is now investigating.
Late on Thursday afternoon between 5 and 6 p.m., one megawatt hour of electricity cost 936 euros in german electricity wholesalers; almost 94 cents per kilowatt hour. “Low wind and high consumption came together,” said the Federal Ministry of Economics,explaining the high price. For comparison: On Thursday, a megawatt hour cost an average of 395 euros per day. On the windy December 6th, though, the average price was only 86 euros.
Reason for the price increase? According to goverment spokesman steffen hebestreit, a so-called dark lull on Wednesday and Thursday was to blame, when little solar and wind power was fed into the power grid. Germany had to import electricity from abroad. The lull in the dark is a “very temporary phenomenon,” emphasized Hebestreit. You can read more about the dark doldrums here.
The head of the network agency, Klaus Müller, emphasized in the “Süddeutsche Zeitung” that there was never any danger to the country’s electricity supply. He could “clearly answer no” to the question about impending blackouts. The authority’s monitoring is calibrated for such situations. Still, the authority is now investigating allegations of market abuse.
Such abuse occurs when power plant capacity is withheld in order to drive up the price of electricity. If there are relevant indications, further investigative measures will be initiated. the authority did not provide any details. But what’s
First of all, it is crucial where German electricity comes from. According to the federal government, in the third quarter 63.4 percent came from renewable energies. It was the highest share for a third quarter so far. Coal-fired power plants, on the other hand, were responsible for 21.4 percent of the electricity mix, and natural gas for 11.4 percent. During this time, Germany imported a total of 23.6 billion kilowatt hours of electricity and exported 11.8 billion kilowatt hours.
Though, these values are subject to strong seasonal fluctuations. It is normal that significantly less electricity can be generated from photovoltaics in December. The fact that hardly any energy has been fed in from wind power in the past few days is considered unusual for this time of year. On Thursday and Friday, Germany’s overall electricity production was not sufficient: up to 30 percent had to be purchased spontaneously.
This affects the formation of the electricity price. This is persistent every day on the European electricity exchange through so-called day-ahead trading for the following day. There is also intra-day trading, through which the missing electricity can be purchased on the respective day.Here the fluctuations are especially large – and possibly susceptible to misuse.
Because the German system has a special feature: it works according to the “Merit Order”. This determines which systems are allowed to feed electricity into the grid. The power plants are sorted according to price, with the cheapest ones coming online first. The price of electricity is then determined by the price of the last power plant needed to meet demand.So if a power plant that is actually cheaper holds back capacity and more expensive plants are switched on, the price rises for everyone.However, the offense of manipulation also exists. The federal Network Agency now wants to check this.
One of the critics is hanns Koenig from the consulting firm Aurora Energy Research. In the “Frankfurter Allgemeine Zeitung” he expresses his doubts: “Actually, the performance shouldn’t be as tight as it is indeed right now.” The price peaks are “extremely remarkable”. He refers to data from the Federal Network Agency, according to which
coal and gas sometimes only run at half, and in total only two-thirds, of the installed capacity.The energy company RWE contradicts this representation. They couldn’t offer more service.
What are the main factors contributing to the rise in electricity prices in Germany?
Title: Unpacking Germany’s Electricity Price Surge: An Interview with Energy Expert Dr. Anna Schmidt
Setting: The Time.news studio, where Editor-in-Chief Martin Fischer sits across from Dr. Anna Schmidt, a renowned energy economist and expert in renewable energy systems.
Martin Fischer: Welcome, Dr. Schmidt! It’s great to have you with us today. There’s been quite the stir in Germany recently, with electricity prices soaring. On thursday, we saw prices spike to an eye-watering 936 euros per megawatt hour. What triggered this sudden increase?
Dr. Anna Schmidt: Thank you for having me, Martin! Yes, the spike was indeed shocking. Initially, it seemed straightforward—low wind and solar input during a time of peak consumption.Though, the situation is more complex than that.
Martin Fischer: Absolutely. I read that the German Federal Ministry of Economics attributed the high prices to what they called a “dark lull.” Can you explain what this means?
Dr. Anna Schmidt: Certainly! A “dark lull” refers to periods when both solar and wind energy outputs are unusually low. During this event, which occurred Wednesday into Thursday, Germany was unable to produce enough renewable energy to meet the high demand, leading to the need for electricity imports from neighboring countries.This sudden increase in demand combined with low supply resulted in those unprecedented prices.
Martin Fischer: so,the myth that we can solely blame weather patterns for the rise in prices is misleading? what other factors should we be considering?
Dr. Anna Schmidt: Exactly.While weather does play a significant role, it’s important to also look at market dynamics and the regulatory environment. The Federal Network Agency is currently investigating claims of potential market abuse,where power plants might have withheld capacity to drive up prices artificially. This type of manipulation can substantially impact market stability, especially during vulnerable periods.
martin Fischer: That’s an interesting point. Speaking of the Federal Network Agency, Klaus Müller stated that there was no imminent threat of blackouts despite the high prices. How can we trust that our electricity supply remains stable during such fluctuations?
Dr. Anna Schmidt: Müller’s reassurance is grounded in the agency’s monitoring systems, which are designed to detect and manage such situations. It’s true that during the dark lull, the agency was able to ensure supply continuity, but they are also vigilant against potential exploitation in the market. Maintaining a reliable grid is crucial, particularly as we transition to a more renewable energy-based system.
Martin Fischer: Given the current situation and ongoing investigations, what do you think are the implications for the future of Germany’s energy sector? Will we see more volatility in electricity prices?
dr. Anna Schmidt: The transition to renewable energy is inherently variable, but it’s essential for it to be balanced with reliable energy storage solutions and agile market responses. We may see price volatility as the market adjusts, but with proper investment in technology and infrastructure, the market can stabilize over time. Additionally, increasing interconnections with other energy markets could provide backup during similar periods in the future.
Martin Fischer: Before we wrap up, Dr. Schmidt, what advice would you give to consumers grappling with these unpredictable electricity prices?
Dr. Anna Schmidt: Consumers should stay informed about their energy usage, seek ways to enhance efficiency, and consider options such as fixed-rate plans where available. Additionally, I encourage everyone to support policies that promote transparency in the market and investment in renewable energy technologies. The more informed and active we are as consumers, the more we can influence a sustainable energy future.
Martin Fischer: Wise words indeed! Thank you so much for joining us today,Dr. Schmidt. Your insights shed valuable light on a very complex issue that’s affecting many right now.
Dr. Anna Schmidt: Thank you, Martin! It’s been a pleasure discussing this critically important topic with you.
The camera fades out as Martin Fischer thanks the audience, signaling the end of the segment.