Authorities: Extreme electricity prices during Dunkelflaute were justified. No one manipulated the market

The phenomenon known as Dunkelflaute, or periods of low wind and solar power generation, is becoming increasingly apparent as installed renewable capacity grows. Such situations also occurred in Germany towards the end of last year, when day-ahead market prices soared to as much as a thousand euros per MWh. Representatives of Germany’s grid regulator and antitrust authority have now said that their investigation has so far uncovered no unlawful market manipulation. Extreme electricity prices were therefore justified in these situations.

In recent years, subsidised solar and wind power plants have been pushing conventional thermal power plants out of the market, leading to greater volatility in short-term electricity markets. While under favourable conditions electricity prices often fall to zero or below, under the opposite conditions they soar to hundreds or even thousands of euros. Such situations, known in German as Dunkelflaute, also attracted the attention of German regulators towards the end of 2024.

In November and December last year, Germany’s spot market faced a situation in which prices rose to multiples of their usual levels. The cause was the Dunkelflaute phenomenon. Given that a significant share of generation capacity is concentrated among just a few companies, the country’s antitrust authority joined the investigation alongside the grid regulator.

Towards the end of this October, Germany’s grid regulator, the Bundesnetzagentur, published the results of the investigation, finding no evidence of misconduct in the market during the period in question.

During its investigation, the German regulator examined the market using data on electricity generation, available generation capacity and companies’ activity in the electricity market. A detailed analysis of generation data showed, according to the regulator, that available dispatchable resources were used more extensively than the initial data indicated.

"During periods of low wind and solar generation, the fleet of dispatchable resources was used to the fullest extent possible. Security of electricity supply was ensured at all times through reserve capacity. So far, we have found no evidence of market manipulation. There are still a few isolated incidents that we are continuing to investigate in greater depth. For future periods of low wind and solar generation, we continue to see an urgent need for new dispatchable resources and much greater flexibility on both the supply and demand sides," said Klaus Müller, president of Germany’s grid regulator.

The lignite- and hard-coal-fired power plants reported as available for the period were used intensively during the peak-price hours on 6 November and 12 December 2024. Some gas-fired or pumped-storage power plants did not operate at full capacity, but the share of unused resources was significantly lower than initial estimates had suggested.

The regulator also examined companies’ behaviour in short-term electricity markets, finding no misconduct in this regard either. It is, however, continuing to investigate several individual cases in greater detail.

Market concentration is high, but it was not abused

Given the high level of market concentration among electricity producers, Germany’s Federal Cartel Office also joined the investigation. It examined Germany’s five largest electricity producers: EnBW, LEAG, RWE, Uniper and Vattenfall.

The authority first investigated whether power plants reported as available had actually been used. In the second phase, it examined whether resources reported as unavailable were genuinely unavailable. In such cases, not using profitable available generation capacity in order to drive up electricity prices would be a typical sign of the improper withholding of generation capacity.

According to the antitrust authority’s representatives, however, there was no improper withholding of capacity. Some resources were not used, but the authority said these were mostly highly flexible resources with higher marginal costs. These resources are often used in response to signals from the intraday market, and in these cases intraday prices for the relevant hours were often lower than day-ahead prices.

"Our investigation found no evidence that the five largest electricity-generating companies manipulated the market by withholding generation capacity during the two periods of low wind and solar power generation at the end of 2024. The high electricity prices during these periods were therefore not the result of anti-competitive behaviour," said Andreas Mundt, president of the Federal Cartel Office.

According to Mundt, however, it is clear that excessive prices can be prevented far more effectively through a well-functioning competitive environment than through even the strictest oversight of market abuse. For this reason, he said, upcoming auctions for dispatchable resources must be used to reduce the high concentration in the electricity generation market.