Germany’s severe late-2024 electricity price fluctuations should be studied for their broader relevance in highlighting the instability brought about by improper (perhaps too quick or unplanned) integration of renewable energy into an existing grid, and, potentially, the space it creates for market manipulators. This will likely be observed by other EU countries as they decide whether to follow the Commission’s Green Transition policy or strike out in the manner of Italian PM Giorgia Meloni and the Netherland’s Gert Wilders.
Germany’s competition authority has launched an inquiry into the issue, aiming to uncover whether energy firms manipulated supply during weather-related disruptions to profit from suddenly rising prices. These spikes coincided with periods of so-called “dunkelflaute”—still and cloudy conditions—when energy output from wind and solar power plummets. By contrast, however, there were days when renewables supplied up to 80% of the nation’s electricity, emphasizing the tremendous instability of the current system.
As environmental policies limit fossil fuel use, the effect regulation can have on price and purchasing power becomes stark. Indeed, reduced activity from fossil fuel plants was a major contributor to the price instability of 2024. Germany’s deepening reliance on renewable energy has also resulted in negative electricity pricing during times of excess production, a phenomenon observed in 2023, highlighting the market’s unpredictability. It reveals the fragility of a system heavily reliant on renewable energy sources and without proper battery storage. Indeed, questions have been raised about the management of these backup systems during November and December 2024.
Beyond this, the investigation was triggered by the obvious potential for those in control of energy resources to exploit circumstances (although no evidence of deliberate market manipulation has as of yet been proven). The head of the German cartel office, Andreas Mundt, has suggested the investigation should examine whether certain plants had their operation purposefully reduced so as to inflate prices. The antitrust office can impose fines up to 10% of a company’s global revenues if unfair exploitation of a dominant market position is proven, illustrating the necessity for ongoing vigilance in sectors where power can be exerted.
Apart from possible corruption, however, Germany likely has a problem of insufficient energy storage and grid infrastructure to manage fluctuating renewable energy supply. Germany’s energy transition thus reflects a broader struggle to reconcile sustainable goals with the practicalities of ensuring a stable energy supply, akin to the balance between political ideals and governance realities.
There is an obvious tension between green policies and economic stability at this point. Possible market manipulation is an additional, but more easily addressed, phenomenon that crops up in every sector. Other European states will have to draw lessons for developing a resilient energy grid, and should also invest in energy storage technologies, as these are absolutely central to energy price stability.
