Electricity prices in Central Europe and Northern Europe have surged to record-breaking levels, triggered by a significant shortfall in Germany’s renewable energy production.
On December 12, 2024, Germany saw spot market prices soar to €395 per megawatt-hour (MWh) in the morning, with late afternoon prices nearly hitting €1,000. These levels were unprecedented, as just one year ago on the same date, the price was a mere €106 per MWh.
The price hikes weren’t limited to Germany. Neighboring countries also saw substantial increases. Austria’s morning price reached €360 per MWh, while Belgium’s was €277 and Denmark’s stood at €395. Sweden experienced a stark contrast within its borders: the southern region saw prices spike to €310 per MWh, while the northern part of the country, where most of the electricity is produced, had prices as low as €7 per MWh—an astonishing 97% difference.
The root cause of this turmoil in electricity markets was a period of very little sunlight or wind in Germany. This weather pattern, known as “Dunkelflaute” or “dark doldrums,” left the country’s vast fleet of renewable energy sources, including wind turbines and solar panels, almost powerless. Germany’s wind power capacity exceeds 60 gigawatts (GW), but due to the lack of wind, it was producing less than 4% of its theoretical potential. Solar power, with a capacity of 96 GW, was also generating close to nothing.
In an electricity grid, it’s crucial that the amount of power generated matches the consumption at all times to avoid blackouts. Germany, historically, relied on its modern nuclear plants to provide base load power to balance out intermittent renewables. However, with the shutdown of its last three nuclear plants in April 2023—following a decision made by Angela Merkel in 2011—Germany no longer had this steady source of energy. The Green Party, a partner in Chancellor Olaf Scholz’s coalition, has continued to advocate for a nuclear phase-out.
As a result, Germany has been turning to coal and gas-fired power plants to fill the energy gap, making its electricity generation among the dirtiest in Europe, second only to Poland in terms of pollution and carbon dioxide emissions. Additionally, Germany’s reliance on imports to meet its electricity needs, particularly from France, which operates 56 nuclear reactors, has increased. This demand surge from Germany has pushed up electricity prices across neighboring countries as well.
The higher exchange prices have been passed on to consumers. German households with smart meters and variable rates have received warnings that their electricity prices could exceed €1 per kilowatt-hour during peak hours.
