Previously published ‘Market Report’
Amprion publishes its ‘Market Report’ every year. The report focuses on the current developments in the European electricity market. Amprion analyses market developments such as import and export situations, price convergences, and other effects with a particular emphasis on the effects on Germany. Due to the central location of the Amprion control area in Europe, the report focuses specifically on developments in the Central Western Europe (CWE) region.
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2024
Falling wholesale prices, weak demand, nuclear phase-out - 2023 was another turbulent year on the electricity market. Renewable energies continued to grow.
2023 - another exceptional year? The unrest on the energy markets triggered by the Russian invasion of Ukraine - along with its consequences in the form of state intervention - has subsided. Last year, changes came more from within, as the Amprion market report 2024 shows: In April, the last three nuclear power plants in Germany were shut down, electricity consumption fell and electricity imports increased significantly. For the first time in 21 years, Germany became a net importer of electricity. At the same time, electricity generation from renewable energies increased. In combination, these factors led to an overproportionate increase in the relative share of renewable energies in domestic electricity generation in Germany from 47% in 2022 to 58% in 2023.
Besides the structural changes in electricity generation, wholesale prices for electricity, hard coal and natural gas fell in 2023: the average day-ahead electricity price in Germany was around 102 €/MWh in 2023, compared to 236 €/MWh in 2022. This fall in prices contributed to the costs for congestion management in Germany falling from around 4 billion € in 2022 to 3.3 billion € in 2023.
The completion of the major "Enlag2" project (Energy Line Expansion Act Project 2) last year should also be mentioned in this context. The commissioning of this new transmission line by Amprion and TenneT Deutschland led to a significant reduction in grid congestions and the associated costs.
While domestic electricity generation in Germany declined overall last year, electricity generation from renewable energies increased: In 2023, more than 14 GW of photovoltaics and 3 GW of wind power were installed in Germany. This was accompanied by an increase in renewable electricity generation from around 242 TWh in 2022 to around 260 TWh in 2023.
This is by no means the end of the expansion of renewable energies: the current network development plan shows that the installed capacity of renewable energies must quadruple by 2045 in order to achieve a climate-neutral electricity supply. Storage technologies are also essential. In terms of grid expansion, this means that a further 7,400 km of grid reinforcement and expansion measures will be required compared to the previous network development plan (2021).
“Increasing Transmission Capacity as a Key for the European Energy Transition”
Amprion published the market report on 22 May 2024 and presented the key findings in a webinar. The webinar slides are available here soon.
2023
The war in Ukraine has made for another exceptional year in the electricity market. The acceleration of grid expansion in combination with a new market design thus becomes a top priority.
2022 is the third exceptional year in a row: after the start of the Covid 19 pandemic in 2020, the situation eased for a short time in 2021 before conditions deteriorated drastically again at the end of 2021 in anticipation of the subsequent events in Ukraine. With the Russian invasion of Ukraine early in 2022, gas and electricity prices climbed to an all-time high in Europe in Summer 2022. This has led to exceptional market interventions by the European Commission and was the starting point for a new fundamental discussion of the future market design in Europe. At the same time, the progress in European market integration with the involvement of transmission system operators (TSO) has helped to mitigate the negative impact of the energy crisis.
Especially the go-live of the largest European capacity calculation region (CCR) Core on 8 June 2022, symbolises a milestone for the European market integration. Additionally, the record of German exports to France to partially compensate for the unexpected unavailability of several French nuclear power plants, underlines the cooperation among European TSOs.
This year's Amprion market report focuses on the interaction between grid expansion and electricity market design. Besides strengthening the market, the European transmission grid expansion is essential in order to enable the further integration of renewable energies and alleviating the transmission constraints. For this reason, Amprion is expanding its grid infrastructure by around 5,500 kilometres.
As a result of the whole situation on energy markets, the European Commission has determined to even accentuate their climate goals by raising the targeted share of renewable energies in the EU energy mix up to 45% in 2030. For Germany to achieve its climate targets, offshore wind farms should provide as much power as around 70 large coal-fired power plants by 2045. Offshore wind power in combination with an interconnected grid in the North Sea will significantly push renewable energy generation in Europe.
Accelerating grid expansion on land and at sea is a top priority. It also becomes clear that the course must be set today for a future market design that takes into account the interests of both the market and the grid. This is the only way to achieve Germany's ambitious climate targets while ensuring cost efficiency, system stability and investment security. Amprion’s “Systemmarkt” represents a holistic solution for the future market design.
"How the energy crisis affects the transmission grid and international trading"
Amprion published the market report on 25 May 2023 and presented the key findings in a webinar. The webinar slides are available here.
2022
2021 proved a challenging year for the European electricity market: electricity prices on Germany’s spot markets quadrupled, while gas prices increased almost sevenfold. “This continuing volatility is presenting consumers with significant challenges,” says Dr Hans-Jürgen Brick, CEO of Amprion GmbH. “However, our 2022 market report also shows that the integration of the European electricity markets counteracts such turmoil.”
This development of market integration continued despite last year’s difficult market environment. Among other aspects, this is demonstrated by the high level of price convergence in the Central Western Europe (CWE) region (Germany, France, Luxembourg, the Netherlands, Belgium and Austria), which remained at the previous year’s level in spite of the high prices at the end of 2021. This enabled the electricity price in the CWE market region to develop freely and allowed electricity to be traded without constraints. Buyers on the exchanges therefore paid the same low price for electricity.
Amprion’s market report also indicates that the expansion of the necessary grid structure is a crucial factor for European electricity market integration. “Grid expansion therefore remains our top priority,” says Amprion’s CEO Brick. “In achieving it, we have to give consideration to the needs of both the grid and the market,” adds Brick.
The extent to which the grid is the limiting factor is shown by power transmission in the CWE region. Sufficient capacities for transporting inexpensive electricity from one market region to another were only available for half of the time in 2021, but restrictions were in place during the other half of the year. On the electricity exchange, this implied a higher price to be paid in one market area compared to its neighbouring region. The average price spread in Q4 was around 25 euros per megawatt hour.
One of the conclusions drawn by the report is that the electricity market and the European transmission grid will have to be jointly thought through and evolved more extensively in the future. Amprion has therefore developed a concept for a new market design that could also put the right incentives in place in Europe. In what is called the system market, modular markets are used both to stimulate the necessary generating plants and also to set allocation signals so that they are implemented in locations which are beneficial to the system. The market design also ensures a supply of system services that are necessary for stable grid operation.
Market Report Executive Summary
Webinar presentation: Current developments in the electricity market – Impact of high energy prices
Webinar presentation: Need-oriented grid expansion and the future of the European electricity market
2021
The Covid-19 pandemic has made for an exceptional year in Europe’s electricity market. Despite this, the trend towards market integration continues. Germany is once again importing more electricity than in the years before.
Amprion’s Market Report 2021 illuminates how the European power market is developing and the role of Amprion’s transmission grid as a hub for European electricity transmission. This latest report clearly shows the impact of the Covid-19 pandemic during last year. Electricity consumption in Germany, for example, fell to 544 TWh – the lowest level since 1999 – as a result of the economic downturn. The share of renewables in the energy mix also reached a new high of 49 per cent in Germany, with the progressive expansion of renewable energies and their prioritized access to the market playing a decisive role. As a result of the simultaneous drop in overall consumption, this meant they also provided a higher proportion of the total power supply compared with previous years.
Amprion CEO Dr Hans-Jürgen Brick sums up the findings as follows: “2020 posed a situation that can scarcely be compared to other years. Despite this, the fundamental issues remain clear: we need more flexibility in the grid; Germany will import more power; and we need to keep an eye on ensuring security of supply.”
Last year, Germany recorded its highest electricity imports since 2015. In day-ahead trading, the import volume reached 31 TWh, an increase of 37 per cent compared to the previous year. Net electricity exports amounted to 22 TWh, down 39 per cent year-on-year. Germany exported mainly in the windy winter months, while there was a demand for imports in the summer months when there was little wind.
Under conditions of low consumption and a high share of renewables, the European electricity market operated particularly efficiently: for more than half of the year, prices in Central Western Europe reached equal levels. “This convergence meant that the price of electricity developed freely across the market area. Consumers benefit from this as well,” says Brick.
Another circumstance was highlighted in 2020: given its central location in Europe, Amprion’s grid forms an integral part of the European electricity market. The trend towards increasing market integration is creating new challenges for Amprion. “Going forward, it remains critical that we continue to upgrade and expand our grid to prepare it for the evolving transformation of the energy system. However, we need to move away from an isolated view towards an overall view of multiple infrastructures: examples include the international connection of offshore generation or the use of power-to-gas plants,” Brick explains.
2020
Amprion has published its Market Report 2020, revealing how the electricity market in the Central Western Europe (CWE) region has developed between 2015 and 2019. It discloses that the transmission system operators were able to further reduce trade barriers in the European electricity market.
In this report, Amprion analyses the data from flow-based market coupling (FB MC). This method is used to make the exchange of electricity between the markets of the Central Western Europe (CWE) region efficient – this region taking in Belgium, Germany, France, Luxembourg, the Netherlands and Austria. In 2019, the TSOs succeeded in making sufficient power transmission capacity available during 42% of trading hours so that demand across the entire region could be met at fully converged prices (day-ahead market prices). This has increased price convergence significantly: in 2018, the figure was just 32%.
“The Market Report furnishes proof that trade barriers could be decreased during the course of 2019”, says Dr Hans-Jürgen Brick, chair of Amprion’s management board. This can be attributed to the high transmission capacity provided to the market, efficiency and close interconnection of the power grids within the CWE region. “They play a key role in ensuring Europe’s stable and secure energy system”, said Brick.
The Market Report also shows that the Dortmund-based TSO was able to further increase the efficiency of its grid and by doing so also boost Europe’s electricity market. Whereas in 2018 the share of internal trade constraints for which Amprion was responsible stood at 13.7%, in 2019 this figure was just 7.8%. In addition to ongoing grid expansion measures, this can be put down to what’s known as “Dynamic Line Rating” – a measure that allows key transmission lines to be utilised more efficiently depending on the weather.
All in all, Amprion’s analyses show that cross-border electricity trading has continued to grow in importance. While the demand for transmission capacity in summer can usually be met at European level, power consumption in the individual countries is higher in winter. This inhibits trade and the collective setting of prices. In the summer months of May, June and August 2019, Germany was for the first time a net importer of electricity. One of the reasons for this were the high carbon prices, which made the country’s coal-fired power plants less competitive.
2019
The transmission system operator Amprion has published its market report for the years 2015 to 2018. In this, the company considers the development in the electricity market in the Central Western Europe (CWE) region. With its transmission capacity, Amprion enables an export of electricity of up to eight gigawatts (GW) in high-load times which corresponds to more than half of the total German export performance. Amprion thus represents a central hub for electricity trading with European neighbours.
In the report (Studies and Statements), Amprion summarises data from the so-called flow-based market coupling. This method serves to make the exchange between the markets in the Central Western Europe region efficient. Instead of looking at only cross- border lines, the entire network of the region is included in the coupling of the electricity markets. The participating transmission system operators can in this way optimally promote trading and at the same time ensure network security.
Based on its position, the Amprion network represents a central hub for trading with European neighbours and thus provides an important contribution to their security of supply. Amprion transmits up to eight GW of electricity which corresponds to more than half of the 15 GW that Germany exports during peak periods. Electricity transmission through the Amprion network thus also supports the security of supply in the adjacent countries, especially in critical situations such as in winter 2016/2017.
Also showing as trends are: The integration of CWE markets (Netherlands, Belgium, Luxembourg, France, Germany, Austria) has already advanced far and continues to progress further. This can be shown by the fact that the electricity trading prices for the following day (day-ahead prices) between 2015 and 2018 were identical for every third hour. At the same time, the growing difference between the positive and negative price peaks also demonstrates the challenge of the strongly fluctuating supply of renewable energies.
Dr Hans-Jürgen Brick, Chief Commercial Officer and Chief Financial Officer of Amprion GmbH, said: "The mutual dependency in Europe on system security will continue to rise. We are therefore doing everything physically possible to connect the national markets and networks even better." For example, this is visible in the so-called security margin (flow reliability margin), which transmission system operators maintain: with nine percent, it is lower for Amprion than the CWE average (13 percent). Amprion thus supports a high liquidity of the European market.
"The analyses make it clear that the measures implemented by Amprion and other transmission system operators in recent years have effectively supported cross-border trading as well as system security of European neighbours", said Brick. However, it is also important to consider the physical circumstances of the network.
2018
In the current debate on the further development of the Flow based market coupling (FBMC) the most prominent criticism is the alleged limitation of cross-zonal exchanges by TSOs. This is supposed to be due to insufficient coordination amongst TSOs and, more importantly, the discrimination of cross-zonal exchanges in favour of internal exchanges.
Regrettably, the significant progress of market integration over the last years as well as the strong mutual support between TSOs during critical electricity grid and supply situations rarely gets mentioned in this context.
Right from the very beginning of market integration, Amprion has together with its neighbouring TSOs been actively participating in a large number of regional and European initiatives, including the CWE, NWE, MRC and CORE market coupling as well as the XBID, TSC, SSC and IGCC projects1. This report provides evidence for the significant mutual benefits resulting from our strong and steadily enhanced cooperation with TSOs of the CWE region and beyond.
