Annual Market Update 2023: an electricity market review focused on the Netherlands and Germany, including wider European trends

Key findings:  

• Decreasing wholesale electricity prices across Europe through 2023 due to decreasingnatural gas prices. Wholesale electricity prices across Europe declined in and during 2023. The annual average day-ahead electricity price within the CWE region decreased with 61% to 97 €/MWh.  
   

• In the Netherlands, electricity generation of hard coal decreased from 16TWh in 2022 to 10TWh in 2023. Electricity generation of  gas decreased slightly from 47TWh to 45TWh. Solar and wind power generation increased by 30% to 50TWh, while solar and wind operational capacity increased by 7.8 GW, more than half of which resulted from solar PV, which grew by 4.8 GW in 2023, and onshore wind by 0.7 GW. Offshore wind grew by 2.3 GW, meeting the 2023 target of 4.5 GW of installed offshore wind. 
     

• Net exports of electricity from the Netherlands to other countries rose to 7 TWh in 2023, a record high. Germany became a net importer after decades of being a net exporter in Europe. France returned to being a net exporter thanks to improved availability of their nuclear power plants, which faced high unavailability in 2022, mainly due to plant maintenance. 
   

• TenneT had lower grid balancing costs in 2023. This effect can largely be attributed to the decrease in wholesale electricity prices.  Congestion management costs also decreased in 2023 compared to 2022. Congestion management costs in the Netherlands decreased compared to 2022 to €278 million in 2023 (-30%). The cost decrease is a combination of lower energy prices, less redispatched volumes and increased restriction contracts and reactive power contracts.  
   
  The Annual Market Update is divided into several main topics. First, it charts wholesale day-ahead and intraday market prices and volume trends. It also focuses on trends in various fuel prices. The capacity and generation chapter focuses on the supply side of the electricity system and discusses developments in installed capacity and generation. The subsidy schemes chapter looks at the distribution of budgets, allocated capacity and expected generation in subsidy schemes. There is a chapter on wholesale market integration that also looks at current efforts to interconnect electricity markets in the EU. The last two chapters focus on mechanisms that ensure the stability and functioning of the electricity system for both the Netherlands and Germany: Balancing measures, to ensure that supply and demand are equal at all times; and congestion management, to resolve congestion on the grid.