Market Review

2015
Electricity market
insights Introduction
Price
developments
Flow Based
Consumption
and production
Intraday
markets

Market Balancing Special events

integration
Balancing Redispatch in 2015 Main findings
 2

Introduction Introduction

Price
developments

Flow Based

Consumption
and production

For those with a professional interest in the electricity sector, TenneT publishes this yearly TenneT Market Review.
In this publication we describe the developments in the Western European electricity market, particularly in the Netherlands
Intraday markets
and Germany, where, as the transmission system operator (TSO), TenneT has a central role in facilitating the market.

In this publication we give you the highlights of what was a dynamic year for the
electricity market and put the most important developments into perspective,
allowing you to deepen your knowledge of the events driving the market in 2015.
While average wholesale prices rose in the majority of European countries,
including Belgium and France, they decreased in Germany and the Netherlands.
For Germany this was the fourth time in a row and in the Netherlands the third
successive time.
This price development was driven by the developments in the production
capacity. Renewable energy production capacity grew strongly again in Germany,
following the long-term subsidy policy. The new offshore wind farms that were
connected to the TenneT grid contributed significantly. Also, the Netherlands
showed some growth in the installed capacity of renewables, but here the main
development came from the full commercial production of the three new coal-
fired power plants. Belgium was hit by a number of planned and unplanned
outages, which led to a sharp increase in imports from the Netherlands and
France, resulting in record exports for the Netherlands.
The increased need for imports into Belgium was facilitated by the go-live of
Flow Based market coupling for Germany, the Netherlands, France and Belgium. Market
integration
This enlarged the possibilities to make capacity available for international trade,
on the border where it is most valuable.
In this fourth edition of the TenneT Market Review, we also want to draw your
Balancing
attention to the substantial impact that the German energy transition has on
the daily operation of the electricity system. Replacing conventional generation
by renewable generation on a different location and with different production
patterns in 2015 led to a situation where redispatch measures were needed
Redispatch
on 90% of the days. The ongoing grid reinforcements will alleviate this problem.
This TenneT Market Review was created in close cooperation with IAEW from
RWTH Aachen University, and we hope that you will enjoy reading it as much
as we enjoyed creating it. Special events
in 2015
Main findings
 3

Day-ahead Introduction

price developments Price

developments

In 2015, average wholesale prices in Germany and the Netherlands dropped further. Prices also decreased in Flow Based
Poland and the Nordic countries. Other European countries witnessed rising wholesale prices in 2015.

Figure 1 shows the development of wholesale prices for the Central Western Monthly Average Day-ahead Wholesale Prices in CWE countries
Consumption
Europe (CWE) region of Germany, the Netherlands, Belgium and France. and production

The yearly average price (base price) in Germany went down by 3.6% in €/MWh

2015 to 31.63 €/MWh and also in the Netherlands by 2.7% to 40.05 €/MWh. 60
For Germany it was the fourth year in a row of decreasing wholesale prices. Intraday markets

50
Wholesale prices in France and Belgium were on average higher than in 2014,
with price peaks in February and October. On average, the French and the 40
Dutch wholesale prices were almost equal in 2015, where the French price Market
integration
used to be much lower. Belgian prices were highest in the CWE region, notably 30
in April, September and October.
20
Base prices across Europe are depicted in Figure 2. The price levels for
Balancing
different European market areas for 2014 and 2015 are visualised by the 10
colours: the greener the colour of the market area, the lower the price.
In addition, Figure 2 shows the percentage of hours in which a country 0
had the exact same wholesale price as the Dutch, respectively the German,
January

February

March

April

May

June

July

August

September

October

November

December

January

February

March

April

May

June

July

August

September

October

November

December
Redispatch
market area (i.e. full price convergence). Germany and Austria constitute
one market area, meaning there is full price convergence of 100%. 2014 2015
NL BE FR DE

In 2015, prices dropped in Nordic countries, Poland, Germany and the

Special events
Netherlands. Conversely, the prices of all other market areas went up Figure 1: Monthly average of hourly Day-ahead wholesale prices in CWE countries. in 2015
on average. Source: EPEX Spot, energate

Main findings
 4

Day-ahead Introduction

price developments Price

developments

Price convergence generally remains at similar levels. The price convergence of hours with full price convergence between France and Germany and between
Flow Based
of Belgium with the neighbouring countries decreased in 2015. Also the number Denmark and Germany decreased.

European Wholesale Prices and Price Convergence

Consumption
2015 and production
7|7 2|6
2014 2015
9|18 3|11

14|41 4|20 Intraday markets

5|20
14|34

0|0 0|0 0|0 1|1

100|29 100|28
29|100 28|100
77|29 44|20 Market
0|0 integration
0|0

29|100 28|100
31|51 0|0 30|27 0|0

1|0 2|1 Balancing

2|3 4|2
2|3 4|3
Redispatch

Price Convergence to NL (%) | Price Convergence to DE (%) Price Convergence to NL (%) | Price Convergence to DE (%)

Average Day-ahead spot price (€/MWh) Average Day-ahead spot price (€/MWh)

20 25 30 35 40 45 50 55 60 20 25 30 35 40 45 50 55 60
Special events
in 2015
Figure 2: Yearly average of hourly Day-ahead prices and % hours full price convergence (in relation to the Dutch and German market area) of different market areas1 in Europe.
Source: energate, APX, EEX, Nordpool Spot, POLPX, OTE, GME, OMIP
1
For countries with multiple market areas, one market area interconnected to one in another country was chosen: Italy: North, Norway: NO2, Great Britain: GB2

Main findings
 5

Day-ahead Introduction

price developments Price

developments

Figure 3 shows the development of full price convergence in the CWE region
in more detail. The monthly pattern of the convergence between German and
Dutch prices in 2015 is similar to that of the previous year, but with lower values
in spring and higher values in autumn.
Price Convergence between CWE countries
Among other CWE countries, greater differences could be observed with
Flow Based
lower full convergence in 2015 compared to 2014 for most months. Between
the Netherlands and Belgium, significantly lower price convergences were
witnessed from April onward. Price convergence was very low between France
Consumption
and production

% DE-NL % NL-BE 2014 2015

100 100 Intraday markets

80 80
60 60
40 40
Market
20 20 integration

0 0

% FR-DE % BE-FR
Balancing
100 100
80 80
60 60
40 40 Redispatch
20 20
0 0
January

February

March

April

May

June

July

August

September

October

November

December

January

February

March

April

May

June

July

August

September

October

November

December
Special events
in 2015

Figure 3: Shares of hours with full price convergence between CWE countries (2014-2015). Source: EPEX Spot, energate

Main findings
 6

Day-ahead Introduction

price developments Price

developments

and Germany with the exception of May and July. Although there were high Volatility of European wholesale prices
Flow Based
levels of price convergence between Belgium and France returned in the first
three months, it was low for the rest of the year, with Belgian prices structurally
above French prices. €/MWh 2014 2015

25
Consumption
The standard deviations of hourly Day-ahead prices in Europe are shown in and production

Figure 4. In general, price movements were less volatile and more evenly 20

distributed, with the exception of Belgium. The standard deviation in Belgium

15
is heavily impacted by two days with extreme prices (cf. chapter 9).
Intraday markets
10
Especially prices in Poland and Spain were less volatile, while prices in the
Nordic countries were more volatile, moving slightly in the direction of other 5
countries on the levels of the European electricity market.
0 Market
integration
Prices in the Nordics and the Netherlands were the ones with the lowest price PL ES IT GB FR CH DE BE CZ NL DK1 DK2 SE4 NO2

volatility in 2015. All bidding zones adjacent to the Netherlands (Germany,

Belgium and Great Britain) showed a higher volatility compared to the Netherlands Figure 4: Standard deviation of European Day-ahead wholesale prices in 2014 and 2015.
in 2015. Sources: EPEX Spot, Energate, APX, EEX, Nordpool Spot, POLPX
Balancing

Redispatch

Special events
in 2015

Main findings
 7

Flow Based Introduction

Market Coupling Price

developments

On May 20th 2015, Flow Based2 Market Coupling (FB) had its go-live in the CWE region. Due to the sophisticated capacity Flow Based
calculation used in FB, import and export capacities increased. This had a dampening effect on wholesale prices in
the Netherlands and Belgium.
Consumption
Under FB, a sophisticated capacity calculation procedure enables the use of Changes of Price Deltas since FB went live and production

the transmission capacity of the grid to be optimized. The previous Available In Figure 1 we saw a decreasing price delta between the Netherlands and
Transfer Capacity (ATC) based market coupling used fixed values for the Germany after the introduction of FB. Figure 6 below shows the distribution
interconnection capacity between the countries of the CWE. Now, under FB, of price deltas between selected combinations of CWE market areas in 2014
a domain of possible combinations of flows is used in the market coupling and 2015. The results show only minor changes in the distribution of price Intraday markets

algorithm. This allows for more degrees of freedom for the algorithm to
optimize. This optimization can lead to flows between countries that are larger
than under ATC. This is clearly shown in Figure 5, where an increase of net
positions3 can be observed after the introduction of FB on May 20th.
There are two possible ways to look at the price developments since the
introduction of the FB. The first one is to compare historical prices and their
convergences before the introduction of FB with the prices after the introduction.
Obviously, that does not take into account changes in other factors that
determine price levels and price convergence discussed in the following
chapters. The second way is to compare the actual outcome with the outcome
of the parallel run4. This has the drawback that changes in bidding behaviour
are not taken into account.
differences between the Netherlands and Germany as well as Belgium and
France in these two years. In contrast, the price differences between both the
Netherlands and Belgium, and France and Germany show significant changes.
Less price convergence and a greater number of high price differences between Market
integration
these bidding zones can be observed. This reflects the insight of Figure 6
that less price convergence between the Netherlands and Belgium occurred.
Additionally, a broader range of price differences, in some cases exceeding
20 €/MWh, can be noticed.
Balancing
Redispatch

2
Special events
 In this report we only discuss Flow Based Intuitive Market Coupling (as implemented) which only allows in 2015
positive commercial schedules from market areas with lower prices into market areas with higher prices.
3
 The net position of a market area is the volume it will export or import in a given hour resulting from the
nominations on long-term capacities and the outcome of the market coupling calculations.
4
 Before go-live there was a FB parallel run, after go-live there was an ATC parallel run until September.

Main findings
 8

Flow Based Introduction

Market Coupling Price

developments

CWE Flow based net positions

Flow Based

7,000
6,000 Consumption
5,000 and production

4,000
3,000
2,000
1,000 Intraday markets
0
-1,000
-2,000
-3,000
Market
-4,000 integration
-5,000
-6,000
01-05-14

17-05-14

03-06-14

19-06-14

05-07-14

21-07-14

06-08-14

22-08-14

07-09-14

23-09-14

09-10-14

25-10-14

10-11-14

26-11-14

12-12-14

28-12-14

13-01-15

29-01-15

14-02-15

02-03-15

18-03-15

04-04-15

20-04-15

06-05-15

22-05-15

07-06-15

23-06-15

09-07-15

25-07-15

10-08-15

26-08-15

11-09-15

27-09-15

13-10-15

29-10-15

14-11-15

30-11-15

16-12-15
Balancing

DE FR NL BE

Figure 5: Daily net positions of CWE countries from May 2014 – December 2015. Source: ENTSO-E
Redispatch

Special events
in 2015

Main findings
 9

Flow Based Introduction

Market Coupling Price

developments

Impact of Flow Based on Hourly Price Difference between CWE countries

Flow Based

Amount Amount
of hours NL-DE of hours NL-BE 2014 2015

3,000 8,000 Consumption

and production
2,400 6,400
1,800 4,800
1,200 3,200
600 1,600 Intraday markets

0 0

Amount Amount
of hours BE-FR of hours FR-DE
Market
5,000 5,000 integration
4,000 4,000
3,000 3,000
2,000 2,000
Balancing
1,000 1,000
0 0
0 0
0

-5

-0

10

->

-5

-0

10

->
-2

-1

-1

0-

-1

-2

-2

-2

-1

-1

0-

-1

-2

-2
-5

-5
25

25
5-

5-
0-

0-
10

15

20

10

15

20
<-

0-

5-

<-

0-

5-
-1

-1
-2

-1

-2

-1
Redispatch
Figure 6: Hourly price difference between the CWE countries divided over clusters of price difference for 2014 and 2015. Source: EPEX Spot, energate

Comparing FB with ATC parallel run the CWE region for May to September 2015. Structural differences between
Special events
To exclude the impact of other influencing factors, we have to evaluate the the market results from FB and the ATC model can be observed, showing that in 2015
functioning of FB based on the results from the parallel run. Figure 7 shows FB leads to more differentiated results.
the resulting number of price areas for the FB and the parallel ATC run in

Main findings
 10

Flow Based Introduction

Market Coupling Price

developments

On the one hand, the FB approach presents more hours of full price
convergence in all CWE countries. On the other hand, there is a higher share
of hours in which the CWE region is split into four price areas. In contrast, the
ATC methodology mostly results in two or three price areas. So, the full price
convergence increases between two countries, whereas the partial price
convergence in CWE decreases with FB.
Figure 8 plots the Day-ahead prices5 against the net positions6 of the market area
Flow Based
for the FB and the parallel run with an ATC calculation. Looking at the net
positions of Belgium, it is obvious that FB allows for significantly larger imports
(negative net positions) into Belgium. FB is much less restrictive than ATC.
Consumption
The same is apparent for Germany and France, which have both higher positive and production

and negative net positions, indicating that FB provides additional room for
This leads to two main findings: firstly, a more efficient and flexible allocation of the market. Even though FB enables the Netherlands to increase imports, the
available capacities is accomplished; secondly, the existing available capacities bottom right graph in Figure 8 indicates a restriction at around 4 GW. This limit
are still restrictive for achieving full price convergence for the whole CWE reflects an external constraint which is added by the TSOs to the FB algorithm Intraday markets

region, but monthly levels around 40% were reached in May and July. to ensure system reliability. Overall, imports in the CWE region under FB where
43% higher than they would have been under ATC, whereas exports where
30% higher.
Market
integration

Balancing

Redispatch

Special events
in 2015
5
Please note that on this scale the graph does not show the extreme price levels that occurred in Belgium;
please refer to Chapter 9 where these situations are discussed
6
The net position of a country is the amount of electricity this country imports or exports in a given hour
following the outcome of the market coupling calculations

Main findings
 11

Flow Based Introduction

Market Coupling Price

developments

Comparing the resulting prices of the two methodologies in the period May until Impact FB on the shares of the number of price areas within CWE countries
Flow Based
September, it can be noted that the average wholesale prices of the Netherlands
and Belgium decreased considerably as a result of FB, whilst average prices
increased slightly in Germany and France, as shown in the table below. %

100
Consumption
and production
FB ATC Difference
80
BE 44.1 55.1 -20.0%

NL 39.9 46.7 -14.7% 60 Intraday markets

DE 32.2 30.9 4.0%

40

FR 34.9 32.7 6.9% Market

20 integration

0
FB ATC FB ATC FB ATC FB ATC FB ATC
Balancing
May June July August September

1 price area 2 price areas 3 price areas 4 price areas

Figure 7: Shares of the number of price areas within CWE for Flow Based and the parallel run ATC
Redispatch
for May-September. Source: TenneT

Special events
in 2015

Main findings
 12

Flow Based Introduction

Market Coupling Price

developments

Flow Based effects on wholesale prices and net positions

Flow Based

€/MWh Belgium €/MWh France

90 90 Consumption
and production
70 70

50 50

30 30

10 10 Intraday markets

-10 -10

-30 -30

-50 -50
-4,000 -3,000 -2,000 -1,000 0 1,000 2,000 -4,000 -2,000 0 2,000 4,000 6,000 8,000 Market
integration

FB ATC FB ATC

€/MWh Netherlands €/MWh Germany

90 90
Balancing
70 70

50 50

30 30

10 10 Redispatch

-10 -10

-30 -30

-50 -50
Special events
-4,000 -3,000 -2,000 -1,000 0 1,000 2,000 -4,000 -2,000 0 2,000 4,000 6,000 8,000 in 2015

FB ATC FB ATC

Figure 8: Average Day-ahead wholesale prices and net positions for the CWE countries as in FB and in the parallel run ATC from May-September 2015. Source TenneT

Main findings
 13

Flow Based Introduction

Market Coupling Price

developments

Figure 9 underlines the fact that capacity calculation used in FB provides
additional room for the market on the border of the Netherlands and Germany.
The dashed black line represents the exchanges from Germany to the
Netherlands in 2015 in descending order. In about 1,500 hours the import
exceeds the limit that was used in the ATC Market Coupling methodology.
In summary, the investigation of the parallel run of FB and ATC methodology
Flow Based
leads to the conclusion that FB has been implemented and is now working
successfully. In general, the advanced capacity calculation methods applied
in FB provide more cross-border capacity where the value is highest.
Consumption
and production

Duration Curves Commercial Exchanges between Germany

and the Netherlands
Duration Curves Commercial Exchanges DE - NL
Intraday markets

MWh/h

6,000

Market
5,000 integration

4,000

Balancing
3,000

2,000

Redispatch
1,000

0
Special events
2014 DE > NL 2015 DE > NL MAX NTC 2014 in 2015

Figure 9: Duration Curves of the Commercial Exchanges between Germany and the Netherlands
in 2014 and 2015 compared with the NTC cap in 2014. Source: ENTSO-E

Main findings
 14

Consumption Introduction

and production Price

developments

In Germany, conventional power plants are being replaced by wind and solar, leading to a record renewable production of 32.5% Flow Based
of domestic demand. In the Netherlands, renewables are growing, but at a much lower pace; coal-fired power plants replaced
gas-fired power plants. The development of gas and coal prices brings electricity prices in the two countries closer together.
Consumption
Consumption Annual electricity consumption compared to the base year 2010 and production

As depicted in Figure 10 a downward trend of electricity consumption in CWE

can be reported for recent years. But this trend was not maintained in 2015.
A slight increase of consumption in Belgium, the Netherlands and France could %

be witnessed, whereas the consumption in Germany remains on a downward 102 Intraday markets

trend for the fifth year in a row.

100

98
Market
integration
96

94

92
Balancing
90

88
2010 2011 2012 2013 2014 2015
Redispatch
DE FR NL BE

Figure 10: Annual electricity consumption compared to the base year 2010 in CWE countries.
Source: ENTSO-E
Special events
in 2015

Main findings
 15

Consumption Introduction

and production Price

developments

Figure 11 shows the monthly demand of CWE countries in 2015 and 2010. Development of Monthly Electricity Consumption in CWE countries
Flow Based
There are no monthly structural changes observable. The demand has slightly
decreased in 2015 throughout CWE since 2010. Besides economic growth,
innovations and efficiency measures, the temperature profile is also a driver GWh/month

for the amount of electricity consumption. This can be further illustrated with 60,000
Consumption
the example of the consumption in December for France in 2010 and 2015. 50,000
and production

The average temperature in Paris in December 2010 was 0° Celsius in contrast

40,000
to 9° Celsius in 2015, which led to much higher consumption in December 2010
than in 2015.7 30,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Intraday markets

DE 2015 DE 2010 FR 2015 FR 2010

12,000

10,000
Market
8,000 integration

6,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

BE 2015 BE 2010 NL 2015 NL 2010

Balancing

Figure 11: Monthly electricity consumption in CWE countries. Source: ENTSO-E

In order to compare the demand between 2014 and 2015, Figure 12 shows the
Redispatch
differences in demand between 2014 and 2015. Interestingly, French electricity
consumption in February was on average 4 TWh/month higher in 2015 due
to lower temperatures in 2014. A high heating demand leads to an increased
electrical demand due to the widespread electric heating systems in France.
Special events
This was one fundamental driver for the observed high prices in February 2015 in 2015
in France. In contrast, the consumption in December 2015 was almost 5 TWh/
7
month lower compared to 2014, which can be explained by the previously
Temperatures from Weather Underground

Main findings
 16

Consumption Introduction

and production Price

developments

mentioned high average temperature in 2015. Therefore, the low consumption

Flow Based
in this month can be identified as one driver for the low prices in France in
December 2015.

Monthly Load differences in CWE countries

Consumption
and production

GWh/month

6,000
Intraday markets
4,000

2,000

Market
0 integration

-2,000

-4,000 Balancing

-6,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

DE FR NL BE
Redispatch

Figure 12: Monthly electricity consumption delta between 2015 and 2014 in CWE countries.
Source: ENTSO-E

Special events
in 2015

Main findings
 17

Consumption Introduction

and production Price

developments

Production German Operating Generation Capacities

Flow Based
The supply side of the German and Dutch power systems are analyzed below.
The following paragraphs provide an overview of the Dutch and German
electricity production by looking at the three main drivers: generation stack, GW

generation including renewable generation, and fuel prices. 250 10 Consumption

and production

Dutch and German generation capacity 200 8

The trend of increasing generation capacities based on renewable energy
sources in Germany, which could be witnessed over the last years, continued 150 6
in 2015. Figure 13 compares the operating capacities between 2014 and 2015, Intraday markets

showing the transition from conventional to renewable. 100 4

Power plants fired by oil, natural gas or hard coal and one nuclear power plant 50 2
were shut down. Following the German political decision to gradually phase Market
integration
out nuclear until 2022, the power plant Grafenrheinfeld (1275 MW), located 0 0
in the north of Bavaria was, shut down at the end of June 2015. 2014 2015
-2
In contrast, a high increase of renewable generation was observed. The offshore Nuclear Hard Coal Lignite Natural Gas
Balancing
capacity in 2015 increased fourfold from 2014, with an absolute increase of Oil Hydro Biomass Wind (onshore) -4
more than 2 GW. Wind (offshore) Solar Other ∆

Including generation capacities based on solar power, hydro and biomass, the Figure 13: German Operating Generation Capacities in 2014 (at 29 October 2014) and 2015
addition of renewable generation came to more than 6.8 GW in compared with (at 10 November 2015) per fuel type and the changes in Generation Capacities in 2015. Redispatch
Source: Kraftwerkslisten der Bundesnetzagentur
the 2.8 GW of nuclear and fossil-fuel power plants that were decommissioned.

Special events
in 2015

Main findings
 18

Consumption Introduction

and production Price

developments

Figure 14 shows the development of operational generation capacity Dutch Operating Generation Capacities
Flow Based
in the Netherlands. Overall in 2015 the coal-fired capacity decreased in
the Netherlands as a result of the closing of three older coal-fired power
plants with a combined power of 1.6 GW at the end of 2015 (officially at GW

January 1st 2016). Since the hard coal-fired generation capacity increased 35 2

Consumption
in 2014 with 1.5 GW and the abovementioned closures to place at the end and production
30
of 2015, the Dutch generation capacity throughout 2015 was characterized
1
by a temporary higher share of coal-fired capacity. Operational capacity of 25
gas-fired power plants showed an continuing decreasing trend with a reduction 20
of 1.9 GW in 2014 followed by a reduction of 0.9 GW in 2015, of which 0 Intraday markets

0.4 GW was mothballed. 15

10 -1
Also in the Netherlands, the installed capacity based on wind and solar
5
sources increased in 2015. The installed capacity of solar panels showed Market
-2 integration
an estimated growth in 2015 of 0.35 GW resulting in a projected installed 0
capacity of 1.4 GW at January 1st 2016. The generation capacities based 2014 2015
on wind increased by 0.6 GW last year, reaching a total of more than 3.6 GW Nuclear Coal Gas Waste -3
at the end of 2015. Biomass/biogas Wind Wind Hydro Solar ∆
(onshore) (offshore) Balancing

Figure 14: Dutch Operating Generation Capacities in 2014 (at 1 January 2015) and 2015
(1 January 2016) per fuel type and the changes in Generation Capacities in 2015.
Source: TenneT

Redispatch

Special events
in 2015

8
CBS Statline: Renewable electricity; production and power. *Preliminary figures for 2015

Main findings
 19

Consumption Introduction

and production Price

developments

The observation in the generation stack of the Netherlands, with a temporary Dutch Coal and Gas Electricity Generation
Flow Based
high share of installed capacities of hard coal-fired power plants in 2015,
is reflected in the production. A shift towards more coal- and less gas-fired
TWh/
generation output in the Netherlands can be conservatively concluded by month

taking a look at Figure 15, as gas-fired units facing strong competition. 8

Consumption
and production

Since the last month of 2014, the generation by hard coal power plants 7
increased significantly due to the new installed capacities. The overall
generation of natural gas and hard coal power plants was rather stable 6

comparing the same months of 2014 and 2015, which supports the perception Intraday markets
5
of generation based on gas being replaced by a generation based on hard
coal. However, it should be noted that three older coal-fired plants, with a
4
combined capacity of 1611 MW closed officially on 1 January 2016. In 2015,
these three plants together accounted for 21.7% of coal-fired generation. Market
3 integration

On the other hand, the growth of installed wind and solar capacities is also
2
observed in Figure 16. Production from solar, especially in the summer months,
becomes more and more relevant. In November we saw an absolute record 1 Balancing
for wind energy, with a production of over 1500 GWh. The total share of
renewables in electricity consumption in the Netherlands in 2015 was 11.1%8. 0
January

March

May

July

September

November

January

March

May

July

September

November

January

March

May

July

September

November
Comparing Figure 16 with Figure 20 further below, the high correlation between
Redispatch
renewable production in the Netherlands and Germany becomes obvious.
Despite the growth of renewable production in the Netherlands, the price 2013 2014 2015

impact is still largely due to high imports from Germany in times of high Coal Gas

renewable production.
Special events
Figure 15: Dutch gross electricity generation from coal and gas plants (>10MW). Source: TenneT in 2015

Main findings
 20

Consumption Introduction

and production Price

developments

Dutch Monthly Average Solar and Wind Feed-in

Flow Based

MWh/h €/MWh

1,800 60
Consumption
and production

1,500 50

1,200 40
Intraday markets

900 30

600 20 Market
integration

300 10

0 0 Balancing
January

February

March

April

May

June

July

August

September

October

November

December

January

February

March

April

May

June

July

August

September

October

November

December

January

February

March

April

May

June

July

August

September

October

November

December

January

February

March

April

May

June

July

August

September

October

November

December
2012 2013 2014 2015
Wind (MWh/h) Solar Feed-in (MWh/h) Average Dutch Day-ahead Price (€/MWh)
Redispatch

Figure 16: Dutch monthly average wind and solar feed-in and Day-ahead price. Source: CBS, EnTranCe

Also for Germany too, the change of the generation stack is reflected in the exporting position of Germany, this leads to a share of 32.5% of Germany's
Special events
electricity production as shown in Figure 17. The share of renewable generation electricity consumption. The German political target of 35% renewable energy in 2015
– especially wind and solar – continuously increased over recent years and generation of consumption in 2020 seems within reach.
reached a record of 30% of gross electricity generation. Due to the net

Main findings
 21

Consumption Introduction

and production Price

developments

German Power Generation Figure 18 compares the distribution of the feed-in from renewables between
Flow Based
different sources in Germany. In 2014, more than one-third of the renewable
feed-in was produced from onshore wind turbines and only 1% from offshore
% wind capacities (but the latter increased in 2015 to 4%). The share in production
100 from offshore wind is larger than its share in capacity. A rough calculation
Consumption
indicates that 1 MW installed capacity offshore produces 50% more electrical and production

energy compared to 1 MW installed capacity onshore. Wind energy contributed

80 a total of 44% of renewable production.

Due to the strong growth of wind energy, the share feed-in by solar decreased Intraday markets

60 to 22% of the total renewable production despite its growth in absolute figures.

Distribution of Renewables in Germany

40 Market
integration

Wind offshore 1% Hydro 12% Wind offshore 4% Hydro 10%

20
Wind Wind
onshore 34% onshore 40% Balancing
Biomass 27% Biomass 23%
162.4 TWh 165.7 TWh
0
Waste 3%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
Solar 22% Waste 4%
Nuclear Oil Solar 20%
2014 2015* Redispatch
Lignite Other

Hard Coal Renewable energy sources

Hydro Biomass Waste
Natural Gas
Solar Wind onshore Wind offshore

*preliminary value Special events

Figure 17: Shares of gross electricity generation per generation type in Germany (2004-2015). Figure 18: German distribution of renewables shares feed-in. Source: AG-Energiebilanzen in 2015
Source: AG-Energiebilanzen (*Preliminary values for 2015) (*Preliminary values for 2015)

Main findings
 22

Consumption Introduction

and production Price

developments

Figure 19 depicts the German average monthly feed-in from solar and wind is a strong variation. In March and October of 2015, the feed-in by wind
Flow Based
over the last four years. A high monthly variation of feed-in – and thereby full turbines was remarkably low, which was one important driver for higher
load hours of solar and wind – can be observed. The feed-in of solar and wind average Day-ahead prices in the German market area. In contrast, the average
are complementary on a monthly basis. In the winter months from autumn feed-in increased in November and reached a record in December of 2015.
to spring, the average feed-in of wind turbines is relatively high and the solar The high renewable feed-in in these two months reduced the average
Consumption
feed-in low, whilst in the summer months it is usually vice versa, but still there Day-ahead prices due to the merit order effect. and production

German Monthly Average Solar and Wind Feed-in

Intraday markets

MWh/h €/MWh

18,000 60

15,000 50 Market
integration

12,000 40

9,000 30 Balancing

6,000 20

3,000 10
Redispatch

0 0
January

February

March

April

May

June

July

August

September

October

November

December

January

February

March

April

May

June

July

August

September

October

November

December

January

February

March

April

May

June

July

August

September

October

November

December

January

February

March

April

May

June

July

August

September

October

November

December
Special events
2012 2013 2014 2015 in 2015
Wind (MWh/h) Solar (MWh/h) Average German Day-ahead Price (€/MWh)

Figure 19: German monthly average wind and solar feed-in and Day-ahead price. Source: EEX, ENTSO-E

Main findings
 23

Consumption Introduction

and production Price

developments

A more general effect of solar energy on the wholesale price is shown in Figure 21 depicts the distribution of renewable feed-in in the different German
Flow Based
Figure 20. First, the average feed-in by solar power increases year over year control areas. The major share of solar and wind feed-in is in the TenneT
due to the additional installed capacities. Second, the base price decreased control area. Due to the long coast line of the German TenneT control area,
over the last three years. Especially around noon, feed-in by solar power is especially with the North Sea, most of the offshore wind farms are connected
the main driver for decreasing prices. with the TenneT grid. Apart from high feed-in by onshore and offshore wind
Consumption
turbines, TenneT is challenged by the integration of the feed-in from photovoltaic and production

German Solar Feed-in and Day-ahead prices panels in underlying distribution networks, predominantly in Bavaria.

Furthermore, taking a look at the renewable average feed-in per month in

GWh/h €/MWh 2015, the development of offshore capacities is visible. Although a very small Intraday markets

15 60 amount of feed-in by offshore capacities at the beginning of the year can be

observed, a significant increase of the average feed-in through the year can
be reported. As an example, the HelWin2 Project has been in operation since
June 2015 and provides a DC-grid connection of 690 MW for wind farms in Market
integration
10 40 the eastern North Sea. This connection is used to integrate the feed-in such
as the Amrumbank West wind farm with a generation capacity of 288 MW.

Balancing
5 20

Redispatch
0 0
0-1h

1-2h

2-3h

3-4h

4-5h

5-6h

6-7h

7-8h

8-9h

9-10h

10-11h

11-12h

12-13h

13-14h

14-15h

15-16h

16-17h

17-18h

18-19h

19-20h

20-21h

21-22h

22-23h

23-24h

2013 2014 2015 2013 2014 2015

Special events
in 2015
Figure 20: German average hourly solar feed-in 2013-2015 and average hourly Day-ahead prices.
Source: EEX, Anlagenregister der Bundesnetzagentur

Main findings
 24

Consumption Introduction

and production Price

developments

German Wind and Solar Feed-in by TSO and per Month

Flow Based

TWh/a GW/month

60 20
Consumption
and production

45 15
Intraday markets

30 10

Market
integration

15 5

Balancing

0 0
TenneT Amprion 50Hertz TransnetBW
January

February

March

April

May

June

July

August

September

October

November

December
Redispatch

Wind Onshore Wind Offshore Solar

Figure 21: Distribution of German wind onshore, offshore and solar feed-in among TSOs and monthly among 2015. Source: ENTSO-E
Special events
in 2015

Main findings
 25

Consumption Introduction

and production Price

developments

Marginal costs
Flow Based
In order to explain the developments described, primary fuel prices as well as Primary fuel prices continued to fall, whilst CO2 prices increased in 2015.
prices for CO2 certificates are investigated in more detail. Figure 22 shows the Due to this contrary development of primary energy prices and CO2 emission
corresponding graphs for the prices of natural gas at the Title Transfer Facility allowances, a distinction between different technologies is necessary.
(TTF), hard coal (API#2) and CO2 emission allowances.
Consumption
and production

Prices for Natural Gas, Hard Coal and CO2 Certificates

€/MWhth €/t €/tCO2 Intraday markets

50 80 10
70 9
40 8
60
7 Market
30 50 6 integration

40 5
20 30 4
3
20
10 2 Balancing
10 1
0 0 0

2014 2015 2014 2015 2014 2015

Natural gas Hard coal CO2
Redispatch

Figure 22: Daily Day-ahead gas prices from EEX TTF Index, monthly hard coal prices from API#2
ASK (CIF ARA) and daily CO2 future price for years 2014/2015 traded through 2013/2014/2015.
Source: Energate9
9
Assumptions: Gas EEX TTF daily Day-ahead Index (Energate), API#2 hard coal monthly (CIF ARA) (Energate),
CO2 future price daily for years 2013/2014/2015 traded through 2013/2014/2015 (EEX, Energate). API#2
index published in $ and converted here to €, in order to be comparable to the other primary energy prices.
The outcome of a marginal generation cost calculation for hard coal- and
natural gas-fired power plants is shown in Figure 23. The price movements
of hard coal and CO2 emission allowances compensated each other in 2015.
Special events
However the decrease of natural gas prices predominated the increase in 2015
of the CO2 emission allowances prices, which resulted in a small reduction
of the marginal generation costs.

Main findings
 26

Consumption Introduction

and production Price

developments

The spread between gas and coal generation costs was stable between 2014 hard coal in Germany for most of the hour, despite the growth of hard coal-
Flow Based
and 2015 on average but a decreasing spread over the course of 2015 could fired generation in the Netherlands and the growth of renewables in Germany.
be observed. This contributes strongly to price convergence between the Therefore the difference in marginal generation costs shown in Figure 23 is
Netherlands and Germany in the second half of 2015. This is because in 2015 the most important driver for the difference in the wholesale prices in the
gas remained the price-setting technology in the Netherlands, in contrast to two countries.
Consumption
and production

Marginal Generation Costs Gas and Coal

€/MWh Intraday markets

60

50
Market
40 integration

30

20
Balancing
10

0
January

February

March

April

May

June

July

August

September

October

November

December

January

February

March

April

May

June

July

August

September

October

November

December

January

February

March

April

May

June

July

August

September

October

November

December
Redispatch

2013 2014 2015

Natural gas Hard coal CO2 certificate costs Transportation costs

Special events
Figure 23: Marginal generation costs of hard coal and natural gas power plants. Source: EPEX, energate10, IAEW in 2015

10
Assumptions: Gas EEX TTF daily Day-ahead Index (Energate), API#2 hard coal monthly (CIF ARA) (Energate), CO2 future price daily for years 2013/2014/2015 traded
through 2013/2014/2015 (EEX, Energate). API#2 index published in $ and converted here to €, in order to be comparable to the other primary energy prices.

Main findings
 27

Intraday markets Introduction

In 2015, Germany saw a growing importance of Intraday trading. This was supported especially by the development of the intraday Price
developments
auction and driven by the demand from market parties for quarter-hourly products for shaping, and to be able to act on improving
forecasts during the day to balance their portfolio.
Flow Based
Intraday trading is becoming increasingly important due to two factors. First, the introduction of the Intraday auction, which accounts for 4 TWh/a.
the forecasts of renewable feed-in are updated during the day and through the Summing up the quarter-hourly products of the auction and the continuous
ongoing expansion of renewable generation, Intraday trading is more and more trading and comparing it to 2014, an increase of 60% is achieved.
relevant. Second, whilst in the Day-ahead market the tradable products are
Consumption
based on hourly granularity, the possibility to trade quarter-hourly products German Intraday trading volumes and production

in the Intraday market provides the participants with a better trading product
for ramp rates. This is very helpful for trading the feed-in of solar power,
which is always associated with high – and predictable to a high degree – TWh/a

gradients. Furthermore, average hourly products cannot be sufficient for 40 Intraday markets

managing balancing groups in quarterly-hour granularity, especially in

respect to ramp rates. 30

In Germany there were two ways to participate in the Intraday market. On the 20 Market
integration
one hand, there is the continuous trading which allows the participants to trade
hourly and quarter-hourly products from 4 pm the previous day up to the gate 10
closure time of 30 minutes before delivery. This continuous trading option is
based on an open order book. On the other hand, since December 2014 there 0
Balancing
is the Intraday auction clearing at 3 pm, shortly after the Day-ahead auction. 2013 2014 2015
This auction allows trading quarter-hourly products one day before delivery ID Hourly ID Quarterly ID auction

with a market clearing price system.

Figure 24 depicts the traded volumes of the products on the respective
Intraday market. An overall growth rate from 2013 to 2015 underlines the
increasing relevance of the Intraday market. The traded hourly product in
the continuous trading increased by about 7 TWh/a, reaching a new record
of 26 TWh/a in 2015, whereas a small decrease of continuous traded
quarterly-hour products can be reported. This small decrease is due to
Figure 24: Intraday Auction, Quarterly and Hourly trading volumes in Germany. Source: EPEX
Redispatch
As already mentioned, one reason to provide tradable products to the market
are ramp rates. Such ramp rates can increase with additional installed generation
capacity based on solar due to the natural predefined gradient over the day.
Special events
Due to the quarterly settlement, balance-responsible parties will want to match in 2015
the predicted production in the market on a quarterly basis.

Main findings
 28

Intraday markets Introduction

Figure 25 differentiates the traded volume between the quarter-hours. It shows products can only trade the hourly average, which results in a 'block profile' Price
developments
that significantly higher volumes in the first quarter-hour and in the fourth that does not match the continuous developments in load and renewable
quarter-hour were traded than in the second or third quarter-hour. This shows production and does not match the balancing responsibility of market parties
how quarter-hour products are used to fulfill ramp rates because hourly on a quarter-hourly basis.
Flow Based
German Quarterly traded Intraday volumes

GWh/a
Consumption
180 and production

160

140
Intraday markets
120

100

80 Market
integration

60

40

20 Balancing

0
1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77 81 85 89 93

Vol quarter-hour 1 Vol quarter-hour 2 Vol quarter-hour 3 Vol quarter-hour 4

Redispatch

Figure 25: Quarterly traded Continuous and Auction intraday volumes in 2015 in Germany. Source: EPEX

To combine this insight with the knowledge of the natural solar gradient over
the day, Figure 26 depicts the weighted average price (WAP) of the continuous
traded quarter-hour over the day and the average feed-in by generation
capacities based on solar in 2015. It is observed that the WAP of the first
quarter-hour is higher than the WAP of the fourth quarter-hour in the morning,
Special events
and vice versa in the afternoon. One explanation is the ramp rate of solar feed- in 2015
in. If market participants trade the expected hourly average on the Day-ahead
market – even without any forecast errors – trading on the Intraday market

Main findings
 29

Intraday markets Introduction

or a new dispatch of the own portfolio is necessary to be balanced within for Intraday prices like residual load, forecast errors and bidding strategies, Price
developments
a quarter-hour. In the morning with a positive slope of the solar feed-in, one it points out the relationship between renewable generation, especially solar,
would be short in the first quarter of the hour and long in the fourth quarter. and the Intraday market due to ramp rates of solar is one driver for systematic
This is reflected in the prices. Although one should not neglect other drivers quarterly ramp demand.
Flow Based
German average Quarterly Intraday prices and average Solar Feed-in

€/MWh GWh/h Consumption

and production

60 18

50 15
Intraday markets

40 12

30 9 Market
integration

20 6

10 3 Balancing

0 0
00 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95
Redispatch
WAP quarter-hour 1 €/MWh WAP quarter-hour 4 €/MWh Average Solar Feed-In GWh/h

Figure 26: Yearly Weighted Average Prices of Quarterly traded products during the day in 2015 in Germany and Yearly Average solar feed-in. Source: EPEX

Special events
in 2015

Main findings
 30

Market integration and Introduction

interconnection flows Price

developments

Figure 27 shows the yearly aggregated commercial scheduled flows (Day-ahead)
for the CWE region and at the German borders in 2014 and 2015.
In 2015, the exports from Germany to southern countries (France, Switzerland,
Austria and the Czech Republic) significantly increased in comparison to 2014.
At the same time, exports from Germany to Scandinavian countries decreased.
In total, the German net commercial exports were 17 TWh/a higher in 2015.
In contrast to Figure 27, Figure 28 shows the yearly aggregated physical flows
Flow Based
for the CWE region and at the German borders in 2014 and 2015. In 2015,
more exports from Germany to Switzerland and Austria could be observed.
Exports to the Netherlands decreased slightly. Imports from France,
Switzerland and the Czech Republic to Germany also decreased.
Consumption
and production

The commercial schedules reflect the transactions that are needed for
In 2015, the exports from the Netherlands increased, most significantly the settlement between market areas with a positive net position and those with
exports towards Belgium increased by 69% to 6.1 TWh. On the other hand, a negative net position in any given hour. The physical cross border flows –
imports into the Netherlands decreased, most significantly from Belgium, shown in Figure 28 - that result from these net positions and the subsequent Intraday markets

decreasing 58% to 1.4 TWh, but also from Germany, with a decrease of 7.8%
to 16.6 TWh. Patterns on the DC interconnectors remained stable with
structural imports from Norway and structural exports to Great Britain. Despite
the overall decrease of imports and the increase of exports, the Netherlands
remained a net importer in 2015.
intraday trade will depend on where in a market area consumption and
production take place and the capacities in the transmission grid, irrespective
of country borders and also include transit flows and loop flows.
Market
integration

Such imports and exports reflect the net positions that result from the market
coupling calculations. In 2014, the market coupling algorithm was based on
Balancing
ATCs. In 2015, this was changed to the Flow Based method, which has a
more sophisticated way of taking available transportation capacity into account
(cf. chapter 3).

Redispatch

Special events
in 2015

Main findings
 31

Market integration and Introduction

interconnection flows Price

developments

European Commercial Cross-Border schedules

Flow Based

2014 TWh/year NO
2015 TWh/year NO

0.1 5.5 SE 0 5.8 SE Consumption

and production
0.8 1.8 0.1 1.6

DKW DKE DKW DKE

2 2.4 1.9 2.1 1.3 1.9 0.9 3.6

Intraday markets

GB 0.1 0.01 GB 0.7 0.2

0.1 PL 0.5 PL
8.2 18 0.3 9.7 16.6 0.9
NL NL Market
3.2 3.6 DE 1.4 6.1 DE integration

BE BE
0.8 5.4
CZ CZ
16.4 0.1 7.7 17.5 1.4 8.6
4.1 3.8
FR FR Balancing
9.9 13.3
16.9 39.1 AT 13.6 44.9 AT
5.8 4.2 5.6 10.4
CH CH

Redispatch

Figure 27: Annual total of commercial Day-ahead cross-border schedules in CWE region and at the German borders in TWh. Source: TenneT, ENTSO-E, BritNed, Swissgrid

Special events
in 2015

Main findings
 32

Market integration and Introduction

interconnection flows Price

developments

European Physical Cross-Border Flows

Flow Based

2014 TWh/year NO
2015 TWh/year NO

0.1 5.4 SE 0.01 5.8 SE Consumption

and production
1 1.1 0.1 1.1

DKW DKE DKW DKE

2 2.3 1.8 2 1.7 2 0.8 3.1

Intraday markets

GB 0.01 0.3 9.2 GB 0.01 0.03 10.7

PL PL
8 24.3 0.01 8.2 23.7 0.001
NL NL Market
1.4 7.9 DE 0.3 12.7 DE integration

BE BE
3.6 2.5
CZ CZ
10.7 0.5 6 9.3 1 2.3
14.4 11.5
FR FR Balancing
0.5 0.8
0.6 10.7 AT 0.2 14.5 AT
2.7 7.6 1.1 12.1
CH CH

Redispatch

Figure 28: Annual total of physical cross-border flows in CWE region and at the German borders in TWh. Source: TenneT, ENTSO-E, Swissgrid

Special events
in 2015

Main findings
 33

Market integration and Introduction

interconnection flows Price

developments

Belgium net Imports Particularly Belgium showed an increasing commercial import dependency.
Flow Based
Figure 29 shows the monthly net imports into Belgium. During the first eight
months, a significant import increase can also be seen to be supported
TWh by high production unavailability. Chapter 9 discusses the price peaks
3 that occurred in Belgium in 2015 in more detail).
Consumption
and production

Intraday markets

Market
integration

0
January

February

March

April

May

June

July

August

September

October

November

December

Balancing

2014 2015

Figure 29: Monthly commercial net imports (import – export) from Belgium in 2014 and 2015.
Source: TenneT, ENTSO-E Redispatch

Special events
in 2015

Main findings
 34

Balancing Introduction

Price
developments
Germany saw a further improvement of the balancing performance of balance-responsible parties in 2015, as is testified by the
reduced volumes of net imbalances; smaller volumes of reserves were activated significantly more often than in the two years
previous, as the number of periods with a small net imbalance increased and the volumes of undersupply decreased. However,
Flow Based
both the Netherlands and Germany saw an increase in the occurrence of more extreme imbalance prices in 2015.

The difference between the imbalance price and the market price can be seen Furthermore, in both countries we see that the net imbalance is more often
as the incentive for market parties to be balanced. Typically, one wants this positive than negative. Apparently there is a tendency for market parties
Consumption
incentive to increase when the system shows a larger imbalance. Figures 30 to oversupply the system. Figures 32 and 33 show that this tendency has and production

and 31 therefore show this price difference11 in relation to the net imbalance in developed in recent years.
2015, for the Netherlands and Germany respectively. The graphs also show a
count of the number of imbalance settlement periods12 (ISPs) in which the net Another effect we can see in Figures 32 and 33 is that the number of ISPs
imbalance volume fell within a certain range. in which the system was well balanced has increased significantly again in Intraday markets

In both countries we see that the differences between the spot prices and
the imbalance prices increase when the net imbalance is larger, reflecting
the scarcity or abundance of energy in the system. However, in Germany
there are also significant differences between the spot and imbalance prices
in situations without significant net volumes of activated reserves
(between -100 MW and +100 MW), this was discussed in more detail
in the TenneT Market Review 2014.
In Figure 30, the 90th percentile of the price delta in the Netherlands reaches
similar values for a range of different volumes of imbalances. This reflects
bidding behaviour on the merit order list and could be an indication of
limited liquidity.
Germany in 2015, whereas for the Netherlands this has somewhat decreased.
The significant improvement (decrease) of the volumes of reserve activation
can most likely be attributed to further improvement of the actions of balance- Market
integration
responsible parties, both in forecasting and in real time. The incentive for
balance-responsible parties to improve their actions can likely be attributed to
the improvements in the calculation of the German imbalance price that have
been applied since 1 December 2012 to improve the consistency between
Balancing
the imbalance price and the market value of energy in the (intraday) spot price.
Redispatch

Special events
11
in 2015
For Germany the Intraday auction price was taken as the relevant market price, whereas for the Netherlands the Day-ahead Market price was used, in the absence
of a liquid intraday market.
12
The imbalance settlement period (ISP) is the period in which imbalances are settled with balance-responsible parties. This period is equal to 15 minutes for both
Germany and the Netherlands.

Main findings
 35

Balancing Introduction

Net Imbalance and Balance Incentives for the Netherlands Price

developments

€/MWh Number of ISPs

400 6,000 Flow Based

350

300 4,800
250
Consumption
200 3,600 and production

150

100 2,400
50
Intraday markets
0 1,200
-50

-100 0
< -650

-650 - -600

-600 - -550

-550 - -500

-500 - -450

-450 - -400

-400 - -350

-350 - -300

-300 - -250

-250 - -200

-200 - -150

-150 - -100

-100 - -50

-50 - 0

0 - 50

50 - 100

100 - 150

150 - 200

200 - 250

250 - 300

300 - 350

350 - 400

400 - 450

450 - 500

500 - 550

550 - 600

600 - 650

650 <
Market
integration

< short long >

90% quantile
75% quantile Balancing
Median

25% quantile
10% quantile
Number of ISPs

Redispatch
Figure 30: Net imbalance clusters (in MW) and differences between the imbalance price and the Day-ahead price in the Netherlands. Source: TenneT, EPEX Spot

Special events
in 2015

Main findings
 36

Balancing Introduction

Net Imbalance and Balance Incentives for Germany Price

developments

€/MWh Number of ISPs

400 6,000 Flow Based

350

300 4,800
250
Consumption
200 3,600 and production

150

100 2,400
50
Intraday markets
0 1,200
-50

-100 0
<= - -1400

-1400 - -1300

-1300 - -1200

-1200 - -1100

-1100 - -1000

-1000 - -900

-900 - -800

-800 - -700

-700 - -600

-600 - -500

-500 - -400

-400 - -300

-300 - -200

-200 - -100

-100 - 0

0 - 100

100 - 200

200 - 300

300 - 400

400 - 500

500 - 600

600 - 700

700 - 800

800 - 900

900 - 1000

1000 - 1100

1100 - 1200

1200 - 1300

1300 - 1400

1400 - =>
Market
integration

< short long >

90% quantile
75% quantile Balancing
Median

25% quantile
10% quantile
Number of ISPs

Redispatch
Figure 31: Net imbalance clusters (in MW) and differences between the imbalance price and the Intraday price in Germany. Source: Regelleistung.net, Energate, TenneT

Special events
in 2015

Main findings
 37

Balancing Introduction

Dutch Imbalance volume distribution development German Imbalance volume distribution development Price
developments

6,000 6,000

Flow Based
5,000 5,000

4,000 4,000
Consumption
and production
Number of ISPs

Number of ISPs
3,000 3,000

2,000 2,000
Intraday markets

1,000 1,000

0 0 Market
integration

<= - -1400
-1400 - -1300
-1300 - -1200
-1200 - -1100
-1100 - -1000
-1000 - -900
-900 - -800
-800 - -700
-700 - -600
-600 - -500
-500 - -400
-400 - -300
-300 - -200
-200 - -100
-100 - 0
0 - 100
100 - 200
200 - 300
300 - 400
400 - 500
500 - 600
600 - 700
700 - 800
800 - 900
900 - 1000
1000 - 1100
1100 - 1200
1200 - 1300
1300 - 1400
1400 - =>
< -650
-650 - -600
-600 - -550
-550 - -500
-500 - -450
-450 - -400
-400 - -350
-350 - -300
-300 - -250
-250 - -200
-200 - -150
-150 - -100
-100 - -50
-50 - 0
0 - 50
50 - 100
100 - 150
150 - 200
200 - 250
250 - 300
300 - 350
350 - 400
400 - 450
450 - 500
500 - 550
550 - 600
600 - 650
650 <

< short long > < short long >

Volume ranges (MW) Volume ranges (MW)
Balancing
2013 2014 2015 2013 2014 2015

Figure 32: Net imbalance volume distribution in the Netherlands by Net imbalance clusters (in MW). Figure 33: Net imbalance volume distribution in the Netherlands by Net imbalance clusters (in MW).
Source: TenneT Source: regelleistung.net
Redispatch

Special events
in 2015

Main findings
 38

Balancing Introduction

Figures 34 and 35 give insight in the distribution and the development of
difference between the imbalance prices and the market prices in the Netherlands
and Germany respectively. In both countries we see that the number of ISPs
with a large price difference increases. The price differences below -50 €/MWh
and above 50 €/MWh are highlighted as the striped surface in Figures 34 and
35. In the Netherlands the frequency of price differences of below -50 €/MWh
increased for injection and withdrawal with 41.3% and 49.0% respectively, as
for above 50 €/MWh increased with 59.9% and 51.6% respectively. In Germany
the price differences below -50 €/MWh decreased with 13%, whereas the price
differences above 50€/MWh increased with 34%. This means that, for both
This is true for both sides: the imbalance prices are more often much lower, Price
developments
but also more often much higher than the market prices. This trend is shown
in the top 20 highest price differences on both the negative and positive side.
For the Netherlands, the top 20 maximum prices on the negative side clearly
increased by a maximum price of -697 €/MWh and on the positive side
Flow Based
remained the same. For Germany, the top 20 maximum prices clearly increased
on both sides to 6328 €/MWh and -6027 €/MWh.
Finally, for the Netherlands it is relevant to note that the number of ISPs with
Consumption
two imbalance prices13 increased to 14%. In 2014, this number decreased, and production

Germany and the Netherlands, high differences become more frequent. but in 2015 it was back at 2013 levels.

Intraday markets

Market
integration

Balancing

Redispatch

Special events
in 2015
13
The Dutch balancing regime applies a different imbalance price for settlement of positive and negative
imbalance for those ISPs where TenneT has dispatched upward regulating bids as well as downward
regulating bids.

Main findings
 39

Balancing Introduction

Dutch price duration curves imbalance prices German price duration curves imbalance prices Price
developments

€/MWh €/MWh

200 200
Top 20 max Top 20 max
Flow Based
500 7,000

6,000
150 450 150
5,000
400
Imbalance - Day ahead price delta’s

Imbalance - Day ahead price delta’s

4,000

350 3,000
Consumption
100 100 and production
2,000
300
1,000
250
0
50 2014
Withdrawal
2014
Injection
2015
Withdrawal
2015
Injection 50 2013 2014 2015

Intraday markets

0 0

Top 20 min Top 20 min Market

-50 -50 integration
-350 0

-400 -1,000

-450 -2,000
-100 -100
-500 -3,000

-550
Balancing
-4,000

-600 -5,000
-150 -650
-150
-6,000
-700 -7,000
2014 2014 2015 2015 2013 2014 2015
Withdrawal Injection Withdrawal Injection
-200 -200 Redispatch
Number of ISPs Number of ISPs

2014 Withdrawal 2014 Injection 2015 Withdrawal 2015 Injection 2013 2014 2015

Figure 34: Price duration curve difference between imbalance prices and Day-ahead price Figure 35: Price duration curves differences imbalance prices and Day-ahead prices for Germany
for the Netherlands Special events
in 2015

Main findings
 40

Redispatch Introduction

Price
developments
The energy transition has a major impact on the system operation of the TSOs. The new renewable generation has different
production patterns and is produced at different locations than the conventional generation it replaces. Redispatch measures,
whereby generators modify their production schedule on request of the TSO, were needed on 90% of the days in 2015,
Flow Based
so have become standard practice in Germany.

Figure 36 shows the development of redispatch volumes per month since 2014 Monthly redispatch TenneT control zone in Germany
for the German TenneT control zone by type of redispatch measure. The bars
Consumption
point out how much redispatch has increased in 2015 compared to a year and production

before, but also the variation in the need for redispatch measures from month GWh

to month. 3,000

Also, it shows significant increases in 2015 in the use of multilateral remedial 2,500
Intraday markets

action (MRA) and countertrade, especially in August and September, and of

the power plants in the grid reserve, especially in November and December.
2,000
Both aspects are explained below.
Market
integration
1,500

1,000

Balancing

500

0
1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 Redispatch

2014 2015

Redispatch Countertrade Compensation for EisMan

Multilateral Remedial Action Netzreserve

Special events
in 2015
Figure 36: Monthly redispatch volume by German TenneT control zone in 2014 and 2015
by different types of redispatch measures. Source: TenneT

Main findings
 41

Redispatch Introduction

The increased need for MRA in August and September is due to the Polish grid Redispatch for Wind feed-in power adjustment Price
developments
situation in that period. During August, the prolonged heatwave caused a gradual
increase of unscheduled outages of conventional power plants due to the
reduced availability of cooling water. The unavailabilities of conventional power MW

plants in the Polish control area led to MRA activations instead of redispatch. 6,000
Flow Based
4,000
Due to wind power representing the highest share of renewable power production

Average adjustment of power

in Germany, and its connection to high north-south transits, redispatch measures 2,000

were taken in 90% of the days and therefore became a daily business for the 0 Consumption
German transmission system operators. The high level of measures that had to and production

be taken in November and December can be explained by the high production -2,000

of wind energy in these months. Figure 37 shows the correlation between -4,000
the level of the wind energy production and the total capacity of the measures
TenneT has to take to ensure security of supply. It clearly shows that higher -6,000 Intraday markets

wind feed-in leads to a higher need for measures for a given network. -8,000
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Wind feed-in GW
Frequently, the need for measures is so high that virtually no additional measures
would remain, and grid reserves have to be called upon. The network expansions Redispatch (Sink) Redispatch (Source) Netzreserve (Source) Market
integration
that are needed to reduce the number of measures are progressing. Still, there is Figure 37: Average redispatch versus wind feed-in in the TenneT Germany control area.
a mismatch between the pace at which production locations change as a result Source: TenneT

of the energy transition and that at which the necessary infrastructure can
be realized.
Balancing

Redispatch

Special events
in 2015

Main findings
 42

Special events Introduction

in 2015 Price
developments

Besides the general trends in the Dutch and the German electricity market, we want to highlight three special events that took Flow Based
place in 2015. These are the solar eclipse, the price peaks witnessed in the Belgian market, and the day on which a record share
of demand was covered by renewable energy.
Consumption
Solar eclipse Solar eclipse solar Feed-in Germany March 20th and production

This year was marked by a rare event that proved to be a special test case for
the power markets and power system – a solar eclipse on the 20th of March 2015.
Due to the high solar capacities already installed in the German generation stack, MW

the eclipse led to predictably high gradients of the solar feed-in. Hence, other 25,000 Intraday markets

power plants had to provide the flexibility to cover these gradients, coordinated
by the power markets. The solar feed-in on that day is depicted in Figure 38,
20,000
also showing the maximal gradient, a positive slope of 4.26 GW/15min that
appeared at 11 AM. Market
integration
15,000

10,000

Balancing

5,000

0
Redispatch
00:00 - 00:15

01:15 - 01:30

02:30 - 02:45

02:45 - 03:00

03:45 - 04:00

05:00 - 05:15

06:15 - 06:30

07:30 - 07:45

08:45 - 09:00

10:00 - 10:15

11:15 - 11:30

12:30 - 12:45

13:45 - 14:00

15:00 - 15:15

16:15 - 16:30

17:30 - 17:45

18:45 - 19:00

20:00 - 20:15

21:15 - 21:30

22:30 - 22:45

23:45 - 24:00
Special events
Figure 38: German solar feed-in on March 20th of 2015. Source: EPEX, German TSOs in 2015

Main findings
 43

Special events Introduction

in 2015 Price
developments

Without a solar eclipse, such gradients could only occur during normal Installed Solar Foreseeable Flow Based
operation if Germany had an installed solar capacity of 54 GW. In the German Capacities realization
Grid development plan this is foreseen for the year 2025.
Max 54 GW 2025 (NEP)
This follows from the analysis of historic positive gradients between 2011
Consumption
and 2013, which were below the gradient observed during the solar eclipse, 99.9%-quantile 77 GW 2050 (EU-Trends) and production

and scaling to 4.26 GW per 15 minutes. Using only the 99.9%-quantile of

the historically observed gradients, solar capacities of 77 GW are possible
until such a positive slope can be reached during normal system operations. Nonetheless, the plannability and anticipation of the upcoming solar eclipse
This leads to the conclusion that this was an extraordinary event which will led to much preparation on the part of the system operators and market Intraday markets

not become a feature of normal operation in the coming few years.
participants. Hence, as Figure 39, the expected high ramps led especially to
high prices on the Intraday auction the day before. The lower weighted average
prices during continuous trading on the Intraday market indicate conservative
strategies or lower than expected ramp rates. The solar eclipse was handled Market
integration
with the available trading options on the intraday market.

Balancing

Redispatch

Special events
in 2015

Main findings
 44

Special events Introduction

in 2015 Price
developments

Day-ahead and Intraday markets during solar eclipse

Flow Based

GW
€/MWh

500 25
Consumption
and production

400
20

300
Intraday markets
15
200

100
10
Market
integration
0

5
-100

Balancing
-200 0
06:00 - 06:15

06:15 - 06:30

06:30 - 06:45

06:45 - 07:00

07:00 - 07:15

07:15 - 07:30

07:30 - 07:45

07:45 - 08:00

08:00 - 08:15

08:15 - 08:30

08:30 - 08:45

08:45 - 09:00

09:00 - 09:15

09:15 - 09:30

09:30 - 09:45

09:45 - 10:00

10:00 - 10:15

10:15 - 10:30

10:30 - 10:45

10:45 - 11:00

11:00 - 11:15

11:15 - 11:30

11:30 - 11:45

11:45 - 12:00

12:00 - 12:15

12:15 - 12:30

12:30 - 12:45

12:45 - 13:00

13:00 - 13:15

13:15 - 13:30

13:30 - 13:45

13:45 - 14:00
Redispatch

Day-ahead (€/MWh) ID Auction price (€/MWh) ID hourly WAP (€/MWh) ID Quarterly WAP (€/MWh) Solar feed-in (GW)

Figure 39: Solar Feed-in and Intraday market volumes during the solar eclipse on March 20th. Source: EPEX, German TSOs
Special events
in 2015

Main findings
 45

Special events Introduction

in 2015
In preparation and to be able to ensure system stability, the German TSOs the whole day due to the product length. Additional tertiary control reserve
Price
developments

contracted additional reserve capacities ahead of the solar eclipse, as shown capacities were auctioned only for the critical product from 8 to 12 AM and
Flow Based
in Figure 40. These included higher secondary control reserve capacities for a minor surplus for the product from 12 to 16 PM.

Contracted Control Reserves during solar eclipse

Consumption
and production
MW

8,000

6,000 Intraday markets

4,000

2,000
Market
integration
0

2,000

Balancing
4,000

6,000

8,000 Redispatch
00-04

04-08

08-12

12-16

16-20

20-24

00-04

04-08

08-12

12-16

16-20

20-24

00-04

04-08

08-12

12-16

16-20

20-24
19-03-2015 20-03-15 21-03-15

Special events
FCR pos aFFR pos (HT) mFFR pos FCR neg aFFR neg (HT) mFFR neg
in 2015

Figure 40: Contracted control reserve capacities during solar eclipse in Germany on March 20th. Source: regelleistung.net

Main findings
 46

Special events Introduction

in 2015 Price
developments

The higher than usual auction volumes also led to higher prices as depicted Belgian price peaks
Flow Based
in Figure 41. The highest impact could be observed on the prices for negative Throughout 2015, Belgium faced high rates of unavailability, both planned
secondary control and positive tertiary control reserve. and unplanned, of its conventional generation stack, as can be observed
in Figure 42.
Prices for Contracted Control Reserves during solar eclipse
Consumption
and production

€/MW

600
Intraday markets
500

400

300 Market
integration

200

100
Balancing
0
00_04

04_08

08_12

12_16

16_20

20_24

00_04

04_08

08_12

12_16

16_20

20_24

00_04

04_08

08_12

12_16

16_20

20_24

19-03-15 20-03-15 21-03-15

Redispatch
aFRR neg (HT) aFRR pos (HT) mFRR neg mFRR pos

Figure 41: Prices for contracted control reserve prices during solar eclipse in Germany on
March 20th. Source: regelleistung.net
Special events
in 2015

Main findings
 47

Special events Introduction

in 2015 Price
developments

Unavailability Belgium Power Plants

Flow Based

GW/day

6
Consumption
and production

Intraday markets

Market
integration
3

2
Balancing

Redispatch

0
1

15

22

29

36

43

50

57

64

71

78

85

92

99

106

113

120

127

134

141

148

155

162

169

176

183

190

197

204

211

218

225

232

239

246

253

260

267

274

281

288

295

302

309

316

323

330

337

344

351

358

365
Special events
Planned nuclear Planned natural gas Planned waste Planned other in 2015
Unplanned nuclear Unplanned natural gas Unplanned waste Unplanned other

Figure 42: Planned and unplanned unavailabilities of Belgian power plants. Sources: ELIA, Federal agency for nuclear

Main findings
 48

Special events Introduction

in 2015 Price
developments

This led to some serious adequacy concerns for the Belgian system, which
in turn also led to price peaks. Especially during the end of September and
middle of October, several planned power plant outages plus planned
infrastructure work on the Belgian high-voltage grid led to a high unavailability
of generation and transmission capacities and a high volume of international
flows through the Belgian system. International redispatch measures were
Analysis by the TSOs showed that these exceptional price spikes would
Flow Based
not have occurred under Flow Based Plain Market Coupling. Unlike the
implemented Flow Based Intuitive this method does not have the restriction
that only allows an outcome in which commercial flows only go from a market
area with lower prices to market areas with higher prices. The reason for the
Consumption
introduction of this restriction was that it was considered counter-intuitive and production

needed on several days to relieve the transmission grid and to maintain by stakeholders to have commercial flows from higher to lower priced areas.
system security. In this particular event this restricted further imports into Belgium, leading
to higher prices.
An exemplary situation is illustrated in Figure 43 for two days in the middle of Intraday markets

October in 2015. During those two days the spot price was consistently very This exemplary situation, as well as the price levels and high degree of
high during the day, with the highest peaks reaching 450 €/MWh. This led to unavailability of generation capacities throughout the year, shows how much
most of the thermal generation stack being utilized, even oil-fired power plants, planned and unplanned outages are an impact factor on prices in Belgium
whilst importing at maximum capacity throughout the period. The very high in the current tight situation. Market
integration
prices represented a generation adequacy challenge in Belgium for those days,
but in cooperation with its neighbouring countries, Belgium managed to
prevent any acute adequacy issues from materializing.
Balancing

Redispatch

Special events
in 2015

Main findings
 49

Special events Introduction

in 2015 Price
developments

Price peaks in Belgium on October 15th and 16th

Flow Based

€/MWh GWh/h

500 12
Consumption
and production

10
400

8 Intraday markets
300

200
Market
4 integration

100
2

Balancing
0 0
15-10-15 15-10-15 15-10-15 15-10-15 15-10-15 15-10-15 16-10-15 16-10-15 16-10-15 16-10-15 16-10-15 16-10-15
00:00 04:00 08:00 12:00 16:00 20:00 00:00 04:00 08:00 12:00 16:00 20:00

Nuclear Net Imports Coal Other Day-ahead price

Redispatch
Gas Fuel Hydro Wind

Figure 43: Day-ahead generation schedule and Day-ahead prices during 15th and 15th of October 2015 in Belgium. Sources: Elia, TenneT

Special events
in 2015

Main findings
 50

Main findings Introduction

Price
developments
Average wholesale prices in Germany and the Netherlands decreased in 2015 following downward commodity prices
for coal and gas and increased generation from solar and wind.

In the course of 2015, the marginal generation costs of gas- and coal-fired
generation converged. Typically this contributes to the convergence
of the wholesale prices for electricity in Germany and the Netherlands.
Additionally, the increasing share of coal-fired generation at the expense of
Flow Based
In the Netherlands, the generation from renewables also grew. The production
from solar panels, although still small, now becomes significant at the system
level. Despite its growth, the gap between the Netherlands and Germany grew
wider. Where the German targets for 2020 seem within reach, the Netherlands
Consumption
will need a very steep increase to reach its goals. and production

gas-fired generation in the Netherlands contributes to price convergence in

hours where coal-fired generation becomes price-setting in both countries. Intraday markets are becoming increasingly important for balancing ramp rates
and forecasts in Germany. Supported by the introduction of Intraday auctions,
The introduction of Flow Based market coupling on May 20th, further increased intraday volumes grew significantly with the growing need to balance renewables. Intraday markets

the interconnection capacity that can be made available if the CWE price
differences are large.
However, strong growth of generation from wind energy in Germany and
sharply increased exports from the Netherlands to Belgium caused the
percentage of hours of full price convergence to remain similar to that in 2014.
In Germany the generation stack and the generation itself is under a long-term
transition. So in 2015, the ongoing trends led again to the shutdown of one
nuclear and some conventional units, whereas additional capacities of
renewable generation, especially offshore wind turbines, entered the market.
Additionally, the increase of solar capacities amplified the merit order effect
around noon. Thus, the pressure on income for conventional power plants
remains unabated.
The balancing performance in Germany improved, especially the negative
net imbalances (where the system is 'short') decreased. Imbalance prices
in the Netherlands and Germany in 2015 were more extreme than in 2014. Market
integration
The number and volume of necessary redispatch measures in Germany
increased sharply during 2015. The need for redispatch is strongly correlated
with the amount of wind energy production for which there are not yet sufficient
Balancing
north-south transmission capacities. Redispatch to ensure system stability has
become a daily necessity in Germany.
Redispatch

Special events
in 2015

Main findings
 51

Colophon Introduction

This Market Review is a publication of TenneT Disclaimer Price

developments
Under no circumstances shall TenneT Holding BV nor its subsidiaries, in
Contact particular TenneT TSO B.V. and/or TenneT TSO GmbH, hereinafter “TenneT”,
Address for visitors be liable for any claims, penalties, losses or damages resulting from,
TenneT Holding B.V. and TenneT TSO B.V. or connected to the use of (the information in) this publication. The information
Flow Based
Utrechtseweg 310, Arnhem, the Netherlands in this publication is presented “as is”. TenneT makes no warranties or
T: +31 (0)26 - 373 11 11 representations, whether express or implied, about the information contained
in this publication. In particular, TenneT is not liable for information that is not
Postal address accurate, up-to-date, comprehensive, verified, or complete. TenneT expressly
Consumption
P.O. Box 718 disclaims all liability for claims, penalties, losses or damages (whether arising and production

6800 AS Arnhem, the Netherlands in contract, tort, or otherwise), that arise after the use of, or reliance upon,
any information and material in this publication.
Corporate Communications Department
T: +31 (0)26 - 373 26 00 Intraday markets

E: communication@tennet.eu
W: www.tennet.eu

Project management Market

integration
Erik van der Hoofd (TenneT)

Scientific Supervision
Prof. Albert Moser (IAEW)
Balancing

Project team
TenneT IAEW
Esther Bos Fabian Grote
Redispatch
Tobias Frohmajer Mihail Ketov
Anton Tijdink Denis vom Stein
Berno Veldkamp
Anne Martin van der Wal
Special events
in 2015

Main findings
TenneT is a leading European electricity transmission system operator (TSO)
with its main activities in the Netherlands and Germany. With approximately
22,000 kilometres of high-voltage connections we ensure a secure supply of
electricity to 41 million end-users. We employ approximately 3,000 people,
have a turnover of EUR 3.3 billion and an asset value totalling EUR 15.4 billion.
TenneT is one of Europe’s major investors in national and cross-border grid
connections on land and at sea, bringing together the Northwest European
energy markets and enabling the energy transition. We take every effort to
meet the needs of society by being responsible, engaged and connected.

Taking power further.

© TenneT – April 2016