German electricity prices on EPEX Spot 2024

• The German electricity price level decreased once again after 2023, but there are signs of a slight upwards trend as the year progresses.
• With almost 460 hours of negative prices, the historical record from last year was once again surpassed.
• High price peaks, strong price volatility and continued high price spreads characterize market activity.

German base electricity price decreases further after 2023

In 2024, the German electricity price level decreased further compared to the previous year. This continues the decline that began after the crisis years in 2023. However, the price reduction in 2024 is lower than in the previous year, in which the price level more than halved (see analysis of electricity prices in 2023). Although the annual average base load (EPEX base price) remains more than 2.5 times higher than in 2020 at 79.6 €/MWh, it is again below the annual level of 2021. In line with the development of base load, the average prices for peak load (average price on working days Monday to Friday from 8 a.m. to 8 p.m.) fell to 88.2 €/MWh and off-peak load (average price for all hours that are not at peak load) to 74.8 €/MWh. Figure 1 shows the development of electricity prices for base, peak and off-peak for the years 2017 to 2024.

The ratio of average prices on working days from 8 a.m. to 8 p.m. (peak) to base load (base) was 1.11 in 2024, roughly the same as the previous year (1.12) and has thus been approaching a price equalization between the products since 2020 (1.23). In 2024, the share of renewable energies in total generation increased further and once again reached a record level of 62.7% on average [2]. As the share of renewable energies in the electricity system increases, high and low-price phases are no longer primarily determined by consumption but are increasingly characterized by volatile generation phases. In particular, intraday PV generation is lowering the average price level of the peak product, which is reflected in the increasing price equalization between the products.

While the electricity price level declined in 2024 compared to the previous year, there was a slight increase in the average daily day-ahead price over the course of 2024. As shown in Figure 2, the price increase correlates with the development of the gas price, which recently reached up to 49.5€/MWh after falling in 2023. The gas price therefore continued to have a recognizable influence on the base level of the electricity price. However, the electricity price was considerably more volatile than the gas price. In 2024, the strong price fluctuations on the electricity exchange due to the volatile generation of renewable energies clearly outweighed the influence of the gas price and were particularly decisive when observing shorter periods of time.

Despite the challenging economic situation and the fact that electricity consumption has only risen slightly compared to 2023 (+0.9%), the day-ahead market volume increased by approximately 24.6% in 2024 (see Figure 3). This indicates that the trend of increasing day-ahead market volumes, which began in late 2022, continues in 2024. A similar trend is evident in the intraday markets. The increase in spot market volumes accompanied by almost unchanged or trending downwards electricity consumption indicates a growing relevance of short-term markets. This could also be related to the increasing share of renewable energies and the associated decline in thermal power plants, which historically have consistently provided a certain share of the supply as base load. Renewable energy generation, on the other hand, cannot be planned and is therefore primarily marketed on the spot markets (exception: Power Purchase Agreements).

Considerable fluctuations continue throughout the year and day

The electricity price over the course of the year and day continues to fluctuate considerably, even exceeding the values from the previous year. These fluctuations are also reflected in the characteristics of the hourly (day-ahead market) and quarter-hourly (continuous intraday trading) electricity prices for 2024 in Figure 4. The colour gradient shows the aforementioned renewed increase in the general price level since the second quarter. As in previous years, significant price spreads can be seen in summer and autumn due to the high level of photovoltaic feed-in during the daytime. Price peaks are particularly noticeable in the early evening, when there is often a high demand for electricity combined with a decreasing supply from renewable energy sources.

The year 2024 was also characterized by headlines on extreme price events. A large part of the price peaks was caused by forecasting errors. Furthermore, negative prices resulted particularly from a temporary oversupply of electricity from renewable energy sources. A technical error on 26 June 2024 led to the decoupling of individual countries from the European market and extreme price spikes on the day-ahead market. We have already discussed these events in more detail in the article Reference to article on extreme prices from 21 October 2024.

In November and December 2024, dark doldrums and therefore the occurrence of poor yields from solar and wind energy coupled with seasonally high electricity demand led to extreme prices of up to €936/MWh on the day-ahead market. While the price spikes can be explained to a certain extent by the reduced power plant fleet, the German Federal Cartel Office is currently investigating pricing during the dark doldrums in more detail as a reaction to the extreme price increases [5].

Further increase in hours with negative prices

The number of negative prices increased again compared to 2023 and totaled 459 hours on the day-ahead market in 2024 (see Table 1). As in 2023 (reference from Article 2023), negative prices occurred in particular at the turn of the year, in the transition months on days with an overall low price level and in the summer months. Extremely negative prices occurred particularly in the midday hours of the summer months.

Of the 459 negative hours, more than 92% were subject to the 3-hour rule. Under the 3-hour rule, the value used to calculate the market premium for renewable energy installations remunerated under the EEG and commissioned after January 1, 2023, is set to zero if spot market prices remain negative for at least three consecutive hours. This applies for the entire duration of the negative prices. In 2026, this threshold for the loss of entitlement will be reduced to 2 hours and in 2027 to 1 hour, meaning that negative prices will no longer be remunerated [6]. However, the 3-hour rule does not apply to systems with a fixed feed-in tariff. (see: German electricity prices on EPEX Spot 2023) As of December 2024, 72.4 GW and thus 74.5 % of PV systems received a fixed feed-in tariff or a market premium without restriction by the hourly rule and thus had little or no incentive to react to market signals. For wind energy plants, the figure amounted to 47.4 GW and thus 65.5% [7].

In terms of the development of extreme prices compared to previous years, opposing trends can be seen for high and low prices. The number of prices above 100 €/MWh fell significantly in 2024 compared to 2023 and even fell below the 2021 level. This can be attributed to some extent to the lower overall price level. The situation was different for strongly negative prices (< -50 €/MWh), the number of which has increased significantly again since 2023 after a decline in 2021 and 2022.

Table 1: Analysis of the number of negative prices and very high prices on German spot markets from 2020 to 2024, based on EPEX SPOT data [1].

High price spreads continue in 2024

The increase in electricity price volatility compared to previous years was also reflected in the maximum price spreads. Table 2 shows the maximum hourly and daily price spread as well as the intra-hourly and intra-day standard deviation of electricity prices on the day-ahead and intraday markets for 2024 compared to previous years. The mean standard deviations are calculated using the annual mean value of the standard deviations of the electricity price per day or hour.

In 2024, the average daily price spread and the standard deviation increased further compared to the previous year on all markets analyzed. The daily price volatility thus reached a historical maximum (except for 2022 with its exceptionally high electricity price level). The increasing share of renewable energies contributes to the increasing intraday volatility of electricity prices in particular. An opposite trend can be seen in the hourly volatility characteristics of the intraday markets, which fell in 2024 as in the previous year. These developments can be partly attributed to the lower price level in 2024. The increasing liquidity on the intraday markets, improved forecast quality and the introduction of two additional intraday auction times in June 2024 could also have contributed to the developments [7].

Table 2: Analysis of the price spread and standard deviation of electricity prices on the German spot markets in the years 2020 to 2024 according to EPEX SPOT data [1]

Storage technologies and flexible loads particularly benefited from the historically high price volatility on the German electricity markets in 2024. If electricity had been sold on the day-ahead market at all times with electricity prices above 800 €/MWh, a 1 MW battery storage system could have earned over €11,000 within 10 hours in 2024. The year 2024 thus once again highlights the urgent need for more flexibility to enable an efficient and consumer-friendly transformation of the electricity system.

Due to the ongoing expansion of renewable energies, high price volatility is also expected in 2025.

Sources

[1] EPEX SPOT. 2023. “Market data”, https://www.epexspot.com/en/market-data

[2] EEX European Energy Exchange. 2023. „Spot market data – THE“, https://www.eex.com/en/market-data/natural-gas/spot

[3] Organization of Petroleum Exporting Countries (OPEC). 2023. „OPEC Basket Price“, https://www.opec.org/opec_web/en/data_graphs/40.htm.

[4] ICE. 2023. „ Brent Crude Futures February 2023“, https://www.theice.com/products/219/Brent-Crude-Futures/data?marketId=5280993

[5] EEX European Energy Exchange. 2023. “EU CO₂ Emission Allowances 2024”, https://www.eex.com/en/market-data/environmentals/futures

[6] Entso-E Transpareny Plattform. 2023. “Actual Generation per Production Type”, Data view (entsoe.eu)

[7] Entso-E Transpareny Plattform. 2023. “Total Load – Day Ahead / Actual”, Data View (entsoe.eu)

[8] Erneuerbare-Energien-Gesetz (EEG 2023). § 51 Verringerung des Zahlungsanspruchs bei negativen Preisen. Fassung vom 01.01.2023.

[9] Bundesregierung. 2023. „Solarpaket I – Mehr Solarstrom, weniger Bürokratie“, https://www.bundesregierung.de/breg-de/aktuelles/solarpaket-photovoltaik-balkonkraftwerke-2213726