December Market Watch

In this first edition of our Market Watch our experts delve into the key developments and trends in the electricity market for the year 2023. Focusing on the day-ahead markets (SDAC), they provide insights into the pricing dynamics, net positions, and noteworthy shifts in various regions. As we navigate the complexities of the day-ahead market, this Market Watch aims to provide stakeholders with valuable insights, enabling them to stay ahead in an ever-evolving energy transition.

Downward prices and price spread

Overall, SDAC clearing prices showed a downward trend and largely normalised in 2023. The average market clearing price went down by approximately 59% from 2022. Prices did not only decline in 2023 but also levelled as their price spread curve shifted downwards. The maximum spread was above 100 €/MWh for only approximately 37% of the time in 2023, compared to 95% in 2022. The highest average day-yead prices were observed in Eastern Europe and Italy, with Poland-Swedish SE4 and Italy-North bidding zone borders (excluding CH) being the most congested.

Unavailable nuclear generations shift net positions

The unavailability of generation units plays a significant role in cross-zonal flows and price dynamics. The switch in net positions from the past year for France (import to export), Belgium (export to import) and Germany (export to import), was strongly tied to nuclear output in these bidding zones. Notably, FR (approximately 22 TWh) and SE2 (33 TWh) exhibited the highest levels of exports, whereas IT-NORD (42 TWh) and IT-CSUD (23 TWh) were the bidding zones with the highest imports. 

Negative prices from renewables

The year 2023 was marked by the unprecedented occurrence of negative prices, with the highest number of negative prices seen in the Nordics. Finland experienced exceptionally high-frequency negative prices (highest in Europe: 467 MTUs, the largest share of these concentrated in November). This phenomenon resulted from a combination of low flexibility in the system and high wind output. ​Following Scandanavia, CWE Bidding Zones (NL, BE and DE_LU) frequently showcased high negative prices. The longest continuous period (36 hours) with negative prices in Europe was observed in Germany from 24th - 25th December caused by high wind generation and low demand. ​On the other hand, in the south of Europe (GR, PT, IT and ES), there are Bidding Zones in SDAC which did not experience any negative prices in the past year.