High electricity prices during Dunkelflaute: German regulator to investigate possible market manipulation

A sudden and sharp rise in electricity prices in Germany on December 12 prompted the country’s regulator to investigate possible market manipulation. According to the regulator, conventional power plants were not brought online to a sufficient extent during a period of low wind and solar power generation, contributing to the price increase. German electricity prices also affected prices in neighbouring markets and drew criticism, including from Sweden.

On December 12, Germany experienced a so-called Dunkelflaute, or a period with insufficient wind and sunshine, and therefore low output from solar and wind power plants. Wholesale electricity prices briefly climbed above 900 EUR/MWh as a result of high demand, low renewable energy generation and high gas prices. Germany’s Federal Network Agency (BNetzA) said possible market manipulation may have contributed to the price surge and that it would investigate the situation.

BNetzA chief Klaus Müller said in a social media post that the regulator takes the sharp price increase very seriously. According to Müller, investment in dispatchable capacity and flexibility would be crucial for Germany.

Is there currently a risk of a collapse in #Stromversorgung? No, but @bnetza takes the high #Strompreise very seriously and is investigating allegations of abusive market conduct. It is important to invest in dispatchable capacity and flexibility. #Dunkelflautehttps://t.co/EGBOMEJrvk

— Klaus Müller (@Klaus_Mueller) December 13, 2024

Market manipulation could occur, for example, if companies withhold technically available power plant capacity to drive up electricity prices. The unavailability of fossil-fuel power plants contributed to the price spike in Germany and other European countries.

“Security of electricity supply was never at risk,” BNetzA said in its analysis.

While price peaks during a Dunkelflaute can generally be expected, the regulator and power exchange operators will investigate whether collusion played a role in the price increases in mid-December.

“If we find any relevant leads, we will launch further investigations,” BNetzA said.

“Security of supply in Germany is very high. However, every price spike is an indicator of a shortage of [available generating capacity], and such situations are becoming more frequent,” said Dirk Güsewell, a member of the board responsible for system-critical infrastructure at EnBW.

Swedish minister blames Germany’s energy policy for sharp price rise

Electricity prices also rose suddenly and sharply in Sweden during the same period, prompting the country’s energy minister, Ebba Busch, to blame Germany’s energy policy and its move away from nuclear power for the price increases in Sweden and across the EU.

Busch said Germany’s energy policy has very serious consequences for her country. As the European electricity market allows Germany to import electricity from Sweden when domestic generation is lower, prices in Sweden rose as demand increased.

In a social media post, Germany’s Federal Ministry for Economic Affairs and Climate Action (BMWK) said the EU’s internal energy market was designed to boost overall efficiency in Europe through imports and exports, ultimately benefiting electricity consumers across the region.

“At certain times of the year, Sweden benefits from the output of our wind farms and buys cheap German renewable electricity. When there is little wind, we import electricity from Swedish hydropower plants with storage. That is how electricity trading works,” the ministry said.

(7/7) At certain times of the year, ?? benefits from our wind power capacity and receives cheap German renewable electricity. When there is little wind, we import electricity from ??, where it is generated by hydropower with large reservoirs. That is how electricity trading works.

— Bundesministerium für Wirtschaft und Klimaschutz (@BMWK) December 13, 2024

BMWK added that Sweden and Germany are connected by just one interconnector, with a transmission capacity of 600 MW. The trading zone in southern Sweden, which is directly connected to Germany, has very little installed power plant capacity of its own.

“Electricity prices in Sweden are determined primarily by local factors, such as local generation, demand and infrastructure, but also by broader factors such as gas prices and emissions allowance prices,” BMWK added.