2024 in review: The events that shaped short-term power markets

The way we buy and sell electricity has fundamentally changed in recent years, and 2024 brought even more proof of this transformation. For short-term renewable traders, it was a year of high stakes, translating into impressive gains and, at times, painful losses. Whilst the peak of the energy crisis is (for now) behind us, 2024 was anything but ordinary.

In this article, we reflect on the year’s most widely debated and consequential short-term power market moments and prepare for what’s ahead in 2025.

Weather taking markets by storm

As renewable electricity generation grows, so does our dependency on weather patterns. In 2024, weather talk was no small talk, and new conversations sparked around ‘winter-’ and ‘summer prices.’ Let’s explore the top three events.

Clouds of Saharan dust

In late March and early April, an unusual weather phenomenon painted skies in hues of yellow and red: clouds of Saharan dust gathered over central Europe. The below aerosol forecasts illustrate the scale of the dust spread on April 2nd:

These dust clouds reduce solar radiation and coat PV panels with particles, thus lowering solar production. Two moments underline the striking impact on energy markets:

• March 30th (Easter Sunday): Germany’s grid faced a 2,000 MW shortage during peak solar production (12:45–13:00), leading to a price spike of almost 5,000 €/MWh.
• April 7th: In Belgium, imbalance prices reached record lows of -4,574€/MWh. The market over-forecasted the dust’s impact – or perhaps erred on the side of caution – resulting in a substantial oversupply.

This first special weather event highlights two learnings for short-term traders:

• The need for advanced power forecasting tools that can incorporate extreme patterns like Saharan dust storms;
• The importance of effective trading on the intraday market, seeing the sustained shortage over quarters and hours.

‘The solar age’

As spring turned to summer, the exponential rise of solar power began to dominate discussions, earning this new growing energy source its place in the spotlight:

The challenge lies in the very nature of solar generation – simultaneous and often behind the meter (thus, non-steerable). This creates recurring issues during peak production, namely price cannibalization and its related effects – negative spot prices and the now-iconic ‘duck curves’.

Negative spot prices shattered records last year. By September, the number of hours with negative day-ahead prices surpassed those of 2023 in the Netherlands, Belgium, Germany, the UK, France, Romania, and Poland. Across Europe, the first eight months of 2024 – covering the solar peak season – saw a record 7,841 hours of negative electricity prices.

Thus, solar power producers have been earning less than baseload assets due to producing energy during less favorable hours. Moreover, they have been exposed to rising balancing costs. Here are three examples:

• In April, Switzerland faced an extreme power shortage. The costs for the Swiss TSO were estimated at 30 million Swiss francs, with marginal activation prices of up to 12,000 €/MWh.
• In June, Germany saw imbalance prices skyrocket to ~4,000 €/MWh due to incorrect solar power forecasts.
• In the Netherlands, imbalance prices reached -1,500 €/MWh due to oversupply already in April. This happened despite the significant roll-out of flexibility through imbalance management, a development we covered in our previous end-of-the-year review.

This trend will surely continue to put pressure on the business models for renewable energy producers. Our article on profiting from renewables in short-term power trading remains relevant as we enter 2025.

The ‘Dunkeflaute’ effect

With summer’s sunshine gone, the year’s darker moments settled in. Enter ‘Dunkelflaute,’ a term no longer reserved for German speakers. Literally translated as ‘dark wind lull,’ it describes periods of persistent low wind and sunlight that leave turbines and solar panels generating little to no power.

December 12th might still be fresh in your mind, particularly if you’re in Northwest Europe. On this day, wind generation was well below seasonal norms, while demand was high due to the low temperatures. Day-ahead electricity prices rose across Europe, peaking at 936 €/MWh for 17:00-18:00 in Germany – an 18-year high.

Notice how different the day looked in Finland. Here, high wind speeds were tapering off, starting south of Latvia, creating a bottleneck that limited the flow of cheaper energy.

While December 12th made headlines for its consumer impact (and political value), December 11th was far more critical for short-term power traders. As intraday and imbalance prices soared across Central and Western Europe, particularly in Germany, many traders were caught by surprise holding short positions. Those without flexibility were forced to buy back power at extreme prices, making substantial losses.

A silver lining: Advances in weather forecasting

Now for the good news: moments like those above can also be turned into opportunities. Weather prediction models have been making steady progress, especially with the use of AI; a 2024 milestone was ECMWF’s new Artificial Intelligence/Integrated Forecasting System (AIFS).

Short-term power traders can now choose from global deterministic numerical weather prediction (NWP), high-resolution local NWP models, deterministic AI models, and ensembles. To make the best of these developments, we recommend reading up on the different types of weather models for energy forecasting.

Harmonization ups and downs

The next major development impacting power markets came from the regulatory side. European power markets are in the midst of harmonization, a process that brought compelling developments in 2024.

At the center of attention was PICASSO, the platform designed to optimize automatic Frequency Restoration Reserve (aFRR) activation across borders. Launched in 2022, the mechanism was initially rolled out in the Czech Republic, Austria, and Germany.

However, Italy’s implementation of PICASSO led to surprising consequences for short-term power traders, such as frequent negative prices and fluctuating price signals. The disruptions were so significant that the country’s TSO, Terna, decided to suspend its participation in March; it’s unclear whether Italy will re-join this year.

In October and November 2024, PICASSO expanded to Denmark, the Netherlands, Belgium, and Slovakia. Our analysts anticipated a dampening effect on imbalance prices in the Netherlands. Similarly, in Belgium, imbalance prices have decreased thanks to cheaper aFRR bids from neighboring countries.

While the full impact of PICASSO remains to be established, imbalance prices appear to be moderating overall. Flexible assets that were regularly called upon are now being pushed out of balancing markets, leading them to bid at higher prices. As a result, extreme aFRR bids have been observed and are likely to be setting the price during large imbalances with limited interconnectivity.

The SDAC incident

This rare event deserves a section of its own: On June 25th, a technical issue disrupted EPEX SPOT’s trading system, partially decoupling the Single Day-ahead Coupling (SDAC) mechanism.

In Central Western Europe and Poland, the usual coupled auction processes were replaced with local auctions, excluding cross-border capacity. Local prices deviated sharply from typical coupled distributions, throwing off trading strategies. In Germany, for instance, prices averaged €480/MWh, peaking at €2,300/MWh.

Just one month later, a similar situation was narrowly avoided: a potential full decoupling that came down to a small margin. This time, it was due to a technical issue at the Czech NEMO.

Our take: whilst the highly interconnected and sophisticated power grid and market in Europe is a marvel of innovation, its complexity also leads to vulnerabilities.

A local twist: ‘Overshooting’ in the Netherlands

We may be biased as the Netherlands is our home market, but one local event from 2024 is worth the attention. In November, Dutch TSO TenneT announced a temporary adjustment to its balancing publication process: increasing the delay of its minute price signal from 2 to 5 minutes. This measure is part of an effort to reduce the aggressiveness of imbalance management (also known as passive balancing).

For context: The Netherlands allows traders to deviate from their day-ahead positions to enter imbalance, providing flexibility to balance the grid during PV oversupply. However, when too many assets join in – such as renewables curtailing during negative price events – it can lead to overcorrection. TenneT is then forced to rebalance in the opposite direction within the same program time unit (PTU) (‘regulation state 2’). In this situation, imbalance prices are split to penalize both positive and negative positions.

With the 5-minute delay, the TSO hopes to decrease the frequency of these events. However, market experts, such as Jean-Paul Harrema, are skeptical about its effectiveness.

In any case, predicting regulation state 2 early in the PTU remains critical to capture profits and mitigate losses. In 2024, for the first time, relying solely on TenneT’s minute signal has become a loss-making strategy. Despite the 5-minute delay, we expect this to continue in 2025.

Meanwhile, real-time curtailment is rapidly expanding in Belgium, and it is worth observing how this trend evolves there. This is all the more interesting due to the regional proximity with the Netherlands. We may witness simultaneous renewable-induced oversupply – and simultaneous overreaction.

Four themes for 2025

We hope we have delivered on the promise that 2024 was an eventful year. There are also many other trends we did not touch upon here, such as the outstanding growth of large-scale batteries, driven mainly by drops in lithium-ion battery pack prices. Nevertheless, let’s look ahead – here are four themes for 2025:

More extreme weather

As climate change drives more frequent and intense weather events, changing weather patterns will continue to influence power markets. Beyond the events already highlighted, likely scenarios this year include:

• High shoulder day-ahead prices, as cold spells (driven by La Niña) significantly increase residual load;
• Imbalance risk from icing on wind turbines;
• Summer droughts straining cooling demand, nuclear baseload capacity in France, and river-run flexibility in Central and Western Europe;
• Winter droughts impacting hydro reserves in the Nordics and Alpine regions, resulting in greater day-to-day volatility;
• Intensifying storms triggering high-wind shutdowns.

Advanced power and price forecasting have never been more important in effectively managing these risks.

Solar-driven grid imbalances

Wind and solar power will continue to expand; we’ll wait for the Ember reports to learn which new projections have been surpassed. However, this growth is not uniform. In the Netherlands, the expansion of utility-scale solar is stalling due to the issues outlined earlier. By contrast, other countries are only now entering the stage of solar hypergrowth. Residential PV systems are reaching a peak, further complicating grid management.

Hence, grid imbalances driven by solar production will likely increase in many regions across Europe. In countries where curtailing renewables is not permitted on the balancing market – such as Germany – managing (residential) solar peaks will be particularly problematic.

Scheduled market changes

European harmonization will keep course as well. Italy took the lead with the TIDE reform, transitioning from hourly to 15-minute imbalance prices on January 1st.

France is scheduled to join PICASSO in March, followed by Poland in May. Belgium and the Netherlands are expected to join MARI. On the coupled day-ahead power markets, the exchanges aim to offer quarter-hour units for trading as of March, which may increase intraday liquidity. Our analysts will continue monitoring these dynamics closely to analyze their implications for traders.

Asset owners in charge

With price volatility persisting across day-ahead, intraday, and imbalance markets, flexible trading across markets has become a key strategy, not just for mitigating risks but also for unlocking significant revenue potential. However, many off-takers have yet to incorporate flexibility into their offerings – or remain unwilling to share the associated upside.

In response, asset owners are increasingly taking partial or full control of their trading activities. This shift requires a significant technological and strategic transformation. With the proper setup and the right partner, independent power producers (IPPs) can confidently engage in short-term power markets – and we are ready to support them.

On your marks

In conclusion, short-term power markets are subject to frequent changes and ongoing volatility. What’s more, many players tend to flock to the same opportunity, as illustrated by the Dutch balancing market example. However, the temporary high volatility is typically resolved by the market itself.

For asset owners and traders, these patterns show the importance of having a flexible and responsive trading setup capable of swiftly moving production and flexibility to different markets. By using advanced power forecasting models, algorithmic bidding strategies, and asset flexibility, they can capitalize on volatility across markets.

To start exploring ways to turn risks into profits, we recommend this expert-led webinar, which covers the topic from multiple angles. To continue the conversation, meet our team at E-World 2025. We’ll be there to discuss strategies tailored to your success.