#AskElda - December 2023

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Check out the key developments from December 2023 below:

Electricity Generation

In December, the share of renewables and fossil fuels in the EU's electricity production declined, but this was offset by an increase in the share of nuclear energy compared to the previous month. Examining individual technologies, nuclear, wind, and natural gas experienced a boost in electricity production, while hydro, solar, and coal witnessed a decline.

As 2023 came to a close, an annual analysis revealed a historic record for the share of renewables, reaching 44% in the EU's electricity generation mix. Concurrently, the share of fossil fuels dropped to an historic low of 32%, and nuclear energy improved from the previous year's level of 22% to 24%.

Electricity Demand

Due to colder weather, electricity demand saw a month-on-month upswing of 5.7% in December. On a year-on-year basis, December 2023 saw a marginal decrease compared to December 2022.

In 2023, the European Union experienced a notable 5% decrease in electricity demand compared to the levels observed in 2022. This decline can be attributed to energy-saving initiatives and a reduction in industrial production, influenced in part by the ongoing Russian conflict.

CO2 intensity and prices

In December, higher nuclear and wind power generation led to a decrease in emissions intensity compared to November. Despite some plant unavailabilities, French nuclear power significantly met the heightened demand, with the hourly average production rising from 40 to 43 GW.

Preliminary estimates indicate that in 2023, the power sector achieved a record-low CO2 emissions intensity, surpassing the 2020 record. This decline resulted from higher renewable power production, reduced coal and natural gas output, and a potential contribution from decreased electricity demand due to an industrial production slowdown.

Day-ahead electricity prices

The December day-ahead price approached the May 2023 low of €80/MWh , contributing to the 2023 annual average of €97/MWh—less than half of 2022's €227. Despite this, prices remain double the 2019 level.

In December, power prices initially surged but later remained low, influenced by declining gas and CO2 prices, mild winter conditions, and enhanced nuclear plant availability. Red Sea attacks briefly spiked prices on 18 Dec. In early January, a surge occurred in the Baltic States and Scandinavia, with the 5 Jan average reaching €886/MWh in Estonia and Finland due to freezing weather and power plant shutdowns.

Cross-border flows

In December, the EU maintained a net exporter status, with the UK emerging as its primary importer. Notably, Norway, traditionally a net exporter to the EU, shifted to a net importer position, with Denmark and Germany becoming its principal exporters. This shift was influenced by lower price levels in the latter countries compared to Norway's NO_1 and NO_2 bidding zones.

Throughout 2023, the EU experienced a net import scenario, with an import volume amounting to 0.1% of demand. France, which was a net importer in 2022, surpassed Sweden to become the leading net exporter, while Italy claimed the title of the most importing country. Germany, the leading net exporter in 2022, underwent a reversal, transitioning to a net importer in 2023.

Have you missed this?

• Ecole Polytechnique: Comparison of the Chinese, European and American regulatory frameworks for the transition to a decarbonized road mobility
• European Clean Hydrogen Alliance: Learnbook on Hydrogen Imports to the EU market
• SolarPower Europe : EU market outlook for solar power 2023-2027
• GAS INFRASTRUCTURE EUROPE : How to maintain security of supply while decarbonising gas infrastructure

Check all the data here or contact Mohammed Abi Afthab Olikathodi (aolikathodi@eurelectric.org)