Electricity prices in Germany soared to thousands of euros due to lower solar generation

Germany's intraday electricity market saw an extremely volatile day this Monday, with prices climbing to the upper limit. Lower-than-forecast solar generation and limited cross-border capacity pushed prices as high as 9999 EUR/MWh. On the Czech intraday market, prices climbed to a peak of around 300 EUR/MWh on Monday morning, while the imbalance price reached as much as 20,000 Czech crowns.

Although weather forecasts for the following day are relatively accurate, they are not infallible. A significant deviation between actual renewable generation and the original forecast can therefore have a major impact on the market. One of the most recent examples came on Monday morning, when a similar situation unfolded in Germany. During the morning, prices on the intraday market climbed as high as 9999 EUR/MWh, or nearly a quarter of a million Czech crowns. This is also the market's maximum price; electricity cannot be traded at a higher price there.

According to the Montel news portal, electricity prices began rising sharply in the early morning. This was caused by solar power generation being lower than expected in forecasts issued the previous day. On Sunday, German transmission system operators (TSOs) forecast photovoltaic generation of around 20 GW for 10 a.m. on Monday. On Monday, they revised the intraday forecast down by about 3 GW, while actual generation was only a little over 13 GW. A similar gap occurred around midday, when generation reached a maximum of only 23 GW, compared with 30 GW forecast the previous day.

At the same time, cross-border capacity between Germany and France was also limited, to just 3 GW. Germany therefore also faced limited options for replacing the missing power with imports from abroad.

"The market was already short of electricity, and from 8:00 there was no cross-border capacity available for imports. This meant the local market had to make up the shortfall," said Jean-Paul Harreman, director of Montel Analytics.

Prices also hit record levels on the German balancing market. Harreman estimates that the price for the automatically activated frequency restoration reserve (aFRR) service may have climbed to almost 15,000 EUR/MWh. If so, he said, it would be the highest aFRR price ever recorded in Germany.