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The electricity market in the third quarter of 2022
Smaller share of electricity from conventional energy sources
11 October 2022 - Renewables' share of the grid load in the third quarter of 2022 was 44.8%. Germany was a net exporter of electricity, with an average wholesale electricity price that increased to €375.75/MWh.
Renewables' share of overall generation at 43.9%
Total electricity consumption (grid load) this quarter was 118.9 TWh and thus slightly less than in the third quarter of 2021 (down 0.5%).
By contrast, overall electricity generation was up 2.8% compared with last year's figure, with feed-in from renewables up 5.6% and conventional generation up 0.8%. Renewables' share of total generation increased accordingly from 42.8% in the third quarter of 2021 to 43.9% this quarter. The share of electricity from conventional energy sources fell from 57.2% to 56.1%.
Electricity generation from photovoltaic installations again reached record levels in the third quarter. PV installations fed more electricity into the system in both July and August than ever before in either month. July's photovoltaic generation (7,900.6 GWh) broke even the most recent record, which had been set in June of this year. June's PV generation (7,734.2 GWh) had been the highest generation within one month since at least 2015. Total generation from PV installations was up 22.4% this quarter compared with the third quarter of last year, which led to a correspondingly higher share (16.5%) of overall generation (Q3 2021: 13.8%). Generation from offshore wind and biomass plants were also up (3.9% and 4.0% respectively). By contrast, generation from hydropower was down significantly (26.3% less than in the same quarter of 2021).
The main reason for the changes was the weather, which was characterised particularly in July and August by many hours of sunshine, little rainfall and, as a result, severe drought. Overall, the share of renewables in electricity consumption (grid load) increased from 42.2% to 44.8%.
For overall generation from conventional energy sources, lignite accounted for the largest share (21.8%, up from 20.1% in the same quarter of 2021), followed by generation from hard coal (13.2%; Q3 2021: 10.9%). Nuclear power provided 7.2% of conventional generation, which was half the share it contributed in the third quarter of 2021. This is due to the closures of nuclear plants at the end of 2021. Generation from pumped storage in the past three months accounted for 2.2% (2021: 1.7%) and generation from other conventional sources made up 1.8% (2021: 2.7%).
The share of generation from natural gas was 9.8% in the third quarter (2021: 7.7%).
One reason for the use of gas power plants is their flexibility. They can be switched off and fired up again much faster than coal or nuclear plants, which offers advantages if higher demand for electricity needs to be met at short notice. Gas-fired power plants can also be helpful, and in some cases essential, for redispatching and balancing. The great flexibility of gas power plants can be seen in their feed-in time series.
Natural gas is used to generate process and district heat and, for technical reasons, electricity is often produced at the same time. From the operators' perspective, it makes sense for combined heat and power (CHP) plants to continue producing electricity if they are responsible for supplying heat to an urban or industrial heating network and if it is not yet possible – or would be more expensive – to separate the heat generation from the electricity generation process. They would therefore need to make their own efforts to replace natural gas for heat production with other energy sources.
Long-term gas purchasing agreements, in which the gas had to be used in gas-fired power plants or paid for anyway even if it was not taken, also led to economic incentives to use gas in electricity production. Amendments to the Energy Industry Act (EnWG) removed these restrictions on use and now permits the gas to be injected into storage as well.
Wholesale electricity prices remain high
Since the invasion of Ukraine, there has been a huge increase in prices on the wholesale markets for electricity, gas and coal. Electricity prices have been extremely volatile and closely connected to gas price trends, which in turn have been highly dependent on developments in the Ukraine crisis and Russia's steps to escalate the crisis with regard to supplying gas to Germany and Europe. However, market reactions were not always rational and supported by sound fundamental data. The Bundesnetzagentur publishes daily status reports on the supply of gas in Germany on this page.
The average wholesale electricity price in Germany this quarter was €375.75/MWh, which was nearly four times as much as in the third quarter of 2021 (€97.14/MWh). The main reason for the higher prices is the increase in natural gas prices that occurred in the second half of 2021. Natural gas power plants set the price for many hours in European wholesale electricity trading. In addition, negative prices occurred with greater frequency in the second quarter of 2021 and this reduced the average price accordingly.
The highest price (€871.00/MWh) was recorded on Monday 29 August between 7pm and 8pm. The average wholesale electricity price of neighbouring countries in this hour was €707.52/MWh. The high price in Germany was due to the high amount of generation during this hour from conventional energy sources (43.2 Gwh), which covered a large share of electricity consumption (57.1 GWh).
Day-ahead wholesale electricity prices in Germany
Number of hours with negative prices
The lowest price of negative €0.10/MWh was recorded between 2pm and 3pm on Saturday 16 July. During this hour, renewable generation met 96.2% of electricity consumption (grid load), which reduced the price accordingly. During the same period the average price in Germany's neighbouring countries was €87.68/MWh.
This quarter the average price in Germany's neighbouring countries (€352.07/MWh) was slightly less than Germany's average price (€375.75/MWh).
Germany remains a net exporter
This quarter Germany exported 3,232.8 GWh more electricity than it imported, making it a net exporter. Net imports in the third quarter of 2021 had totalled 815.4 GWh.
Germany was a net exporter of electricity to:
• France, with 3,541.2 GWh (Q3 2021: 206.6 GWh)
• Austria, with 2,394.5 GWh (Q3 2021: 3,301.9 GWh)
• Switzerland, with 2,089.7 GWh (Q3 2021: 1,219.5 GWh)
• Luxembourg, with 947.4 GWh (Q3 2021: 935.3 GWh)
Germany was a net importer of electricity from:
• Denmark 1, with 1,898.8 GWh (Q3 2021: 1,221.4 GWh)
• Sweden, with 945.2 GWh (Q3 2021: 292.2 GWh)
• Norway, with 858.6 GWh (Q3 2021: 1,053.6 GWh)
• Denmark 2, with 814.1 GWh (Q3 2021: 184.1 GWh)
• Netherlands, with 596.3 GWh (Q3 2021: net exports of 1,467.9 GWh)
• Czechia, with 286.8 GWh (Q3 2021: 102.9 GWh)
• Belgium, with 179.4 GWh (Q3 2021: net exports of 29.2 GWh))
• Poland, with 160.8 GWh (Q3 2021: 638.6 GWh)
Germany's significantly higher net imports in trade with the Sweden 4 market area were due to the fact that prices there were lower. Electricity from the Sweden 4 market area was cheaper than in Germany in 1,974 of the 2,208 hours of trading, making it cheaper to import the electricity. That was the case in just 1,029 hours in the third quarter of 2021.
For Switzerland it was the other way around. It was cheaper for Switzerland to import electricity from Germany because electricity from Germany was cheaper than electricity in Switzerland in 1,583 hours of trading (2021: 1,145 hours).
The reason for the continued high level of net exports to France remains the non-availability of power stations there. As was already the case in the first and second quarters of this year, several nuclear plants were not available because they were undergoing maintenance and modernisation work. The average wholesale price in France climbed to €429.73/MWh, which was four times higher than in the third quarter of 2021 (€96.58/MWh).