Partner
Graduate Industrial Engineer
Germany’s Electricity Exchange Balance 2024
The net electricity import of approximately 28 TWh in 2024 has sparked significant public debate, even though it represents a marginal share of only 6% of Germany's total electricity consumption (roughly 646 TWh). The import and export of electricity between Germany and its neighbors is a standard process that has always occurred in both directions. The focus is on creating a cost-effective cross-border electricity market that benefits all participating states.
Therefore, the import surplus does not allow for any conclusions regarding Germany’s security of supply, which was never at risk. This document is intended to present the full development and classification of Germany’s electricity imports and exports and provide an outlook on future developments.
Cross-Border Electricity Trade and Reserve Power Plants (To Date)
In Europe, electricity is traded across borders, meaning it is produced where generation costs are lowest. This promotes efficient trade and the use of cost-effective energy sources across national boundaries. Electricity imports and exports are therefore unrelated to the security of supply.
Germany generally enjoys a high level of security of supply. For the exceptional case of an imminent power failure, conventional reserve power plants are currently available; these serve exclusively as an emergency reserve and may not be used to cushion short-term electricity price peaks. These reserve power plants are only activated at an electricity price of €4,000/MWh (for comparison: during the December Dunkelflaute, peak electricity prices reached €963/MWh).¹ Once the electricity price limit is reached, it is raised further for the future to account for market mechanisms (in the past, this limit was occasionally €3,000/MWh). This adjustment is necessary as electricity prices develop more dynamically with the expansion of renewable energies. Setting an electricity price limit ensures that the market is not distorted and that price discovery continues to follow market economy principles. In fact, the electricity market is most efficient when it is able to cover demand independently. This enables optimal use of power plant capacities and effective integration of demand flexibility.²
Breakdown of the 2024 Electricity Exchange Balance by Country and Energy Source
Cross-border electricity trade data for 2024 shows a total electricity exchange balance of approximately 28 TWh, which can be viewed as a net electricity import. This results from the difference between electricity imports (around 77 TWh) and electricity exports (around 49 TWh).
Development of the Electricity Exchange Balance
To fully evaluate Germany’s current electricity exchange balance and this year’s high volume of electricity imports, a look at the historical development of the electricity exchange balance is essential. This development has been significantly shaped by the economically attractive expansion of renewable energies and the economically motivated shutdown of conventional power plants.
The values for cross-border physical electricity flows are presented here, which are slightly lower than those of the cross-border electricity market. This is necessary because data for the cross-border electricity market only became available starting in 2015 with the introduction of so-called market coupling at the European level.
1990–2000: Balanced Electricity Exchange Balance
From 2000: Growing Electricity Exporter
The expansion of renewable energies, the continued operation of conventional power plants, and the initially low or non-existent prices for emission allowances allowed Germany to produce a large amount of electricity at attractive, competitive prices and export it to neighboring countries.
2017: Peak Electricity Exports
From 2017: Decline in Electricity Exports
Germany has gradually begun shutting down conventional power plants, which represents a sensible action in the wake of the growing expansion of renewable energies. At the same time, significantly rising prices for emission allowances are increasingly making electricity production via coal-fired power plants an economic burden, thereby also hindering the profitability of electricity exports.
2022: An Outlier Year
As a result of the energy crisis and the failure of numerous nuclear power plants in France due to malfunctions and maintenance work, electricity prices rose sharply across Central Europe. This allowed Germany, despite high prices for emission allowances, to ramp up electricity production from coal-fired power plants again and record a strong export year.
2023–2024: Growing Electricity Importer
The shift toward a net import surplus observed over the last two years is essentially due to the significant decline in electricity generation from coal-fired power plants and the shutdown of nuclear power plants. These developments result partly from political actions, but significantly from the sharp rise in prices for CO₂ emission allowances, which makes electricity generation from fossil fuels considerably more expensive. In this context, participation in the electricity market has become economically less attractive for conventional power plants, such as coal and gas-fired plants—coal-fired electricity and especially electricity from gas-fired plants is simply less competitive. Furthermore, the developments in gas prices as well as the prices for lignite and hard coal must be considered, which showed extraordinary volatility and high price levels during the energy crisis of recent years.5
The Future? – Planned Renewable Expansion & “Back-up” Capability
The currently high electricity imports will not be a permanent state. With the continuous expansion of renewable energies, we will produce increasingly larger amounts of cheap electricity in the future. At the same time, we are experiencing a so-called ‘battery storage tsunami,’ as SPIEGEL titled the development.6 The combination of both developments will make it possible to export even more electricity in the future (for example, cheap PV electricity, as it is cheaper than existing fossil or nuclear generation in neighboring countries) while simultaneously being less dependent on imports.
Considerations for 2025:
The planned addition of renewable energies for the year 2025 is as follows:
- Solar: 15 GW (expected additional generation: +13 TWh)
- Wind Onshore: 5 GW (expected additional generation: +8.5 TWh)
- Wind Offshore: 1.8 GW (expected additional generation: +5 TWh)
Overall, this results in an expected additional generation of around 26.5 TWh, which roughly corresponds to the 2024 import balance. Of course, it cannot be assumed that this entire amount will impact the import balance, as coal-fired generation will be reduced at the same time and an increase in electricity demand is expected. Nevertheless, this illustrates the direction in which we are developing in the long term.7
To ensure long-term security of supply in a decarbonized electricity system with a mix consisting almost entirely of renewable energies, a “technology mix with back-up capabilities” is planned in addition to cross-border electricity trade and battery storage capacities. Concrete implementation ideas for this are mentioned in the “Electricity Market Design of the Future” draft published by the Federal Ministry for Economic Affairs and Climate Action in August 2024. In the future, baseload generation, which was previously provided by large fossil-fuel power plants, will be gradually replaced by photovoltaic and wind energy systems. Technologies are therefore required that exhibit high flexibility in both the short and long term to bridge the hours when neither sun nor wind is available.8
Gas-fired power plants are suitable for this purpose as they, unlike nuclear or coal-fired plants, offer high flexibility and can be ramped up or down at short notice. Furthermore, they enable climate-neutral electricity generation by using green hydrogen as an energy source in the future. This can be obtained through electrolysis during times of particularly high electricity generation from photovoltaics and wind energy. Despite the relatively high energy losses during this process, the model remains promising, as electricity demand is often low during these exact phases. Converting surplus electricity into hydrogen is therefore not only cost-efficient but also contributes to grid stability.
Development of Emission Allowance Prices
The European Emissions Trading System (EU ETS 1) covers all large energy sector plants and other energy-intensive industrial plants across Europe. It represents a Europe-wide trading system for emission allowances, which allow the companies that own them to emit emissions. The target of the system is to create economic incentives for emission reduction. Since 2018, there has been a significant increase in prices in this market, making electricity production with conventional power plants increasingly unattractive. In the future, a further price increase is expected due to the decreasing number of available emission allowances.
Development of Average Exchange Electricity Prices
In 2024, average exchange electricity prices (day-ahead auctions) fell by around 16% to €79.37/MWh compared to the previous year. Compared to the energy crisis year of 2022, the decline is as much as 66%, and compared to 2021, a decrease of around 18% was recorded. This occurred despite the fact that import volumes reached their peak in 2024.
Conclusion:
Electricity imports are good. Ultimately, they serve to meet the domestic electricity market’s needs in a market-oriented way at times when electricity is simply cheaper to purchase abroad. The volumes are clearly manageable. With Germany’s fleet of power plants, there is no cause for concern regarding security of supply at these times; instead, electricity consumers as a whole should view this as normal purchasing activity. Looking ahead, we should work on making European markets even more cooperative to ultimately realize the cheapest electricity in all markets.
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From the Newsletter “E|News: Renewable Energy”
3SMARD | The Electricity Market in 2024
4Bar Charts on Electricity Generation | Energy-Charts
6Energy Transition: Huge Storage for the Power Grid – A Battery Tsunami is Rolling In – DER SPIEGEL
7Energy-Charts Talks | Energy-Charts
8Electricity Market Design of the Future
9Average Exchange Electricity Prices | Energy-Charts
10Average Exchange Electricity Prices | Energy-Charts