Monitoring Report 2023 published by the Bundesnetzagentur and the Bundeskartellamt

The Bundeskartellamt and the Bundesnetzagentur have today published the Monitoring Report 2023 on developments in the German electricity and gas markets. The report’s data analyses primarily relate to 2022 but also reflect relevant developments in 2023.

“The legislators decided to avert possible supply shortages with a temporary return of coal-fired power stations and an extension in running time for the remaining nuclear power plants in 2022. These measures have turned out to be effective, but we must still not lose sight of the climate targets.” said Klaus Müller, President of the Bundesnetzagentur.

Andreas Mundt, President of the Bundeskartellamt, said, “We always pay particular attention to conventional electricity generation. Even though market concentration in this sector dropped again in 2022 after a rise in the year before, it is still the case that RWE and some other producers are increasingly indispensable to meet electricity demand. We have to continue to monitor the market closely, especially as electricity imports have become more important, and sometimes essential, to limit the market power of domestic electricity producers.” 

Structure of the electricity generation market

The tightening of natural gas supply caused by the cessation of gas imports from Russia and the resulting higher gas prices on the wholesale markets led to a decline in the amount of electricity generated from gas of about 14 per cent. The temporary return of coal power stations to the market to prevent supply shortages led to more electricity being produced from lignite and hard coal. Just over five per cent more electricity was generated by lignite power stations, while there was an around 14 per cent year-on-year increase in electricity from hard coal-fired power plants. Germany’s total net electricity generation was slighter lower in 2022 due to the drop in consumption.

Gas imports

“We still need the planned LNG terminals to diversify our gas sources further, which is why the Bundesnetzagentur has done its utmost to support the expansion in recent months.” said Klaus Müller, President of the Bundesnetzagentur.

The lack of deliveries from Russia from early September 2022 onwards was made up for with additional imports. The most important sources of imported gas in Germany in 2022 were Norway, the Netherlands and Belgium, with a total volume of 983 TWh or about 68 per cent of all imports to the country. Germany’s first floating LNG terminal started operation in Wilhelmshaven in December 2022. It was joined by two more such terminals in Lubmin and Brunsbüttel in January and March 2023.

Developments in the renewable energy sector

Strong growth in wind and photovoltaic installations, along with a very sunny 2022, led to an increase in generation from renewable energy sources of about eight per cent. The proportion of gross electricity consumption from renewables rose to 45 per cent from 40 per cent in 2021. The development corridors laid down in law were achieved for onshore wind, solar and biomass in 2022, but even more new installations are needed to meet the higher expansion targets for 2030.

The continuing growth in renewable generation together with delays in network expansion led to network congestion, which has to be remedied with redispatch measures. Nevertheless, around 97 per cent of the renewable electricity generated was successfully transported to consumers.

Electricity and gas wholesale trading

Major fluctuation on the wholesale electricity and gas markets was a defining feature of 2022, with wholesale – and therefore also retail – prices reaching new highs. Even though wholesale prices eased and stabilised around the end of 2022 and in the first quarter of 2023, price levels are still higher than before Russia’s war on Ukraine and the start of the energy crisis.

Retail markets for electricity and gas

The combined market shares of the four largest electricity and gas suppliers for interval-metered and standard load profile customers in the retail markets were still below the statutory thresholds for presuming market dominance.

Andreas Mundt, President of the Bundeskartellamt, said, “Key to competition is as many customers as possible actually switching supplier when the price is right. Last year we noted a decline in switching activity, especially among household customers, but now there are offers again that are actually lower than the electricity and gas price relief thresholds. Consumers can not only save money but also help to encourage competition by actively making use of opportunities to switch.”

The impact of Russia’s invasion of Ukraine was still evident in wholesale and retail prices at the beginning of 2023. As at 1 April 2023, electricity and gas prices for household customers were up significantly again compared with the previous year. The rise in retail electricity and gas prices was primarily due to the much higher costs of procuring energy.

The developments of 2022 had a noticeable effect on consumers’ switching behaviour. The number of household electricity customers changing supplier dropped considerably in 2022, by about 16 per cent to just over four million. The number of household gas customers changing supplier fell by about a third to 1.15 million from 1.64 million.

Fortunately, the higher electricity and gas prices were not reflected in the disconnection figures for 2022. Disconnections of electricity supply were down just over 11 per cent year-on-year to about 209,000 in 2022. Disconnections in the gas sector fell by about 15 per cent. In 2022 there were a total of around 23,000 disconnections reported.

The latest report and additional information are available here (in German).