Monitoring Report 2024 published by the Bundesnetzagentur and the Bundeskartellamt

The Bundeskartellamt and the Bundesnetzagentur have today published the Monitoring Report 2024 on developments in the German electricity and gas markets. The report’s data analyses primarily relate to 2023 but also reflect relevant developments in 2024.

“2023 was the first year in which more than half of the electricity produced was from renewable sources. This is a key step on the road to a climate-neutral energy supply. We need to keep up the current pace in expanding renewables, the electricity grid and our electric vehicle charging infrastructure,” said Klaus Müller, President of the Bundesnetzagentur.

Andreas Mundt, President of the Bundeskartellamt, said, “Despite the accelerated expansion of renewables, conventional generation capacity is still essential to safeguard a stable electricity supply. When there’s no wind or sun, conventional capacity is crucial for the supply of electricity in Germany. The closure of more power plants is increasing the significance of the remaining conventional capacity for meeting the demand for electricity. This potentially gives the capacity providers power in the market, which is why a close analysis of market power is more important than ever.”

Electricity generation

There was a decrease in the amount of electricity generated in Germany in 2023. The main reasons behind this were the slowing economy, the mild weather, an increase in imports due to lower electricity prices in other countries, high prices for primary energy and the closure of the last three nuclear power plants. Although generation by conventional power plants decreased by more than a quarter, this was largely balanced by an increase in generation from renewables. 2023 was the first year in which more than half of the electricity produced was from renewable sources. This was due to a decline in demand alongside a larger increase in solar and onshore wind generation capacity. The development corridors laid down in law for biomass were achieved in 2023, but even more new installations are needed to meet the higher expansion targets for 2030, especially with regard to wind capacity.

The combined market share of the five largest producers of conventional electricity in Germany, and consequently market concentration, decreased in 2023. RWE is still by far the largest generator of conventional electricity. Decisive for the analysis of market power in the electricity generation sector in addition to market shares is whether and to what extent a company is indispensable (or “pivotal”) in terms of meeting the demand for electricity. The scope for storing electricity is only very limited, which is why an operator’s conventional capacity is especially indispensable when a high level of demand coincides with a low level of solar and wind generation. The degree of indispensability is decisive in periods when companies with a strong position in the conventional electricity generation sector could deliberately drive up the market price.

Andreas Mundt: “There are no signs of the market power situation in the electricity generation sector easing. On the contrary: although RWE’s power plants were indispensable for meeting the demand for electricity in fewer hours than in the previous reporting period, the overall situation still suggests that the company has a dominant position in the market. We also consider it likely that the degree of indispensability will increase further in future. Based on our analyses, we presume that RWE must observe the prohibition of abusive practices under competition law.”

Determination of a dominant market position within the meaning of competition law would ultimately require a specific individual decision. In the case of electricity producers, the determination of a dominant position affects how they are allowed to behave in the market. In particular, they are not allowed to deliberately withhold generating capacity that would be economically viable to use with the aim of driving up prices. This behaviour would constitute an abusive practice and is prohibited.

Companies are only in a position to abuse their market power in this way if they can make sufficiently accurate predictions about when their power plants will be indispensable. It is quite easy to make short-term predictions about the demand for electricity and the supply of electricity, by renewables as well, because of the factors they depend on such as the time of day, public holidays, seasons or the weather. The Bundeskartellamt’s analyses show that it is possible for RWE to systematically predict the periods in which the demand for electricity could not be met without its capacity.

Gas imports and gas trading

Around 91% of Germany’s gas imports came from Norway, the Netherlands and Belgium. The remaining volumes were imported via the floating LNG terminals in Wilhelmshaven, Brunsbüttel, Lubmin and Mukran. The gas storage facilities were filled and the storage level requirements met well in advance of the statutory deadlines.

Market concentration in parts of the gas sector is still very high despite larger shifts in the markets. The availability of storage capacity for market players is the most important parameter to date for the analysis of market power. The three largest storage facility operators achieved a combined market share of about 70%.

In light of the large shifts in the gas markets, more focus was placed on gas distribution at wholesale level and the monitoring was extended accordingly. Companies with large shares in the total volumes are active in all the areas monitored, with the combined share of the three largest companies in each area higher than 50%, and in some cases considerably higher.

Electricity and gas wholesale trading

2023 saw a significant fall in prices on the electricity and gas markets compared with the previous year. Prices in both spot and futures trading on the electricity and gas wholesale markets fell considerably again, in some cases by more than 50% for electricity and 60% for gas. Nevertheless, the markets are still volatile and price levels are still higher than before Russia’s war of aggression against Ukraine.

Retail markets for electricity and gas

As in previous years, the Bundeskartellamt assumes for 2023 that there is currently no single dominant company on the national markets for the supply of typical industrial and commercial customers (interval-metered customers) and the supply of household and small commercial customers (standard load profile customers on special contracts) in either the electricity or the gas sector.

The stabilisation of the energy markets in 2023 had a noticeable effect in particular for electricity and gas customers. The average electricity price for household customers on 1 April 2024 was €41.59 ct/kWh. This was around 8% lower than the average contractually agreed price a year earlier, when the electricity price brake was still in place and potentially reduced the price actually payable. The prices for heating electricity were also down on the previous year’s contractually agreed prices, with a decrease of about 12% in the price for electricity supplied for night storage heating and 7% for electricity for heat pumps. The average gas price for household customers on 1 April 2024 was 12.5 ct/kWh, down more than 15% compared with contractually agreed prices a year earlier, which may have been lowered by the gas price brake.

Energy prices for non-household customers also stabilised. Industrial customers paid around 13% less for electricity and about 20% less for gas than the year before, while average prices for commercial customers fell by approximately 8% for electricity and around 14% for gas. Prices continued to decrease in the course of 2024 as a result of the large fall in prices on the electricity and gas wholesale markets.

“Consumers have the chance to save money. They will only benefit from lower prices if they are willing to switch and exercise their market power. Electricity and gas customers can use trustworthy switching platforms or offers from consumer organisations to change their supplier or contract and very easily save money,” said Klaus Müller, President of the Bundesnetzagentur.

In 2023 more than 6 million electricity customers switched supplier, representing an increase of about 50% on the previous year and a new all-time record. The number of gas customers switching supplier increased from 1.15 million household customers to a new high of 1.8 million. Around 3 million electricity customers and 660,000 gas customers changed contract with their existing suppliers on their own initiative. An increasing number of electricity suppliers offer dynamic tariffs that are directly linked to changes on the wholesale markets.

Trends in disconnections varied. In 2023, there was a slight year-on-year decrease in the total number of electricity customers disconnected to just over 200,000, while the number of gas customer disconnections rose by 22% to around 28,000.

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