Fears over the reliability of the electricity supply in Europe were validated last week, with a second stretch of cool, overcast, and near-windless weather following a less severe episode in November. As potentially intermittent renewables close in on half of Europe’s total power generation, the weather was not welcome news.

The German word for this is “dunkelflaute.” To be sure, the lights didn’t go out anywhere, but wholesale electricity prices in Germany spiked above €900 per megawatt hour on December 11, and a few heavy industrial consumers temporarily shut down operations that had become uneconomic at those price levels. Clean energy advocates pointed out that many consumers were insulated from the higher rates by long-term contracts. Yet, the episode is a chilling reminder for Germany of its dependence on imported electricity. After shutting down its entire fleet of nuclear power plants, and the unwillingness of Germany’s neighbors to see the resulting price volatility transmitted to their own consumers, this should have been a very foreseeable problem.

Europe has seen a marked acceleration in its energy transition in recent years, as it also has had to grapple with the crisis year of 2022 when it lost most natural gas imports from Russia as a result of sanctions imposed over the invasion of Ukraine. In 2024, renewables covered 45–50 percent of European power generation for most months, up around ten percentage points from just two years ago. Natural gas usage has been in sharp decline as a percentage of the total, with natural gas power plants increasingly moving away from baseload generation to become a “dispatchable” source of firming capacity when renewables are supplying less than average. 

Germany has phased out nuclear power entirely due to the Green Party making that a litmus test for joining any governing coalition years ago, and coal-fired capacity is gradually being phased out. This has effectively ended what used to be a pattern of coal versus gas power switching based on market conditions. Coal and nuclear have historically been the primary generators of baseload power.

Even with the natural gas plants as a dispatchable swing producer, the decline in coal and nuclear capacity has led to a situation where Germany lacks enough installed capacity to cover the occasional severe deficit in renewables, particularly wind. Gas plants now spend most of the time offline, so there is little incentive to invest in capacity, but even when all of the gas capacity is brought online, it cannot cover the sort of deficit seen last week, when German wind generation fell below three gigawatts, from a normal nineteen gigawatts at this time of year. The problem is not the availability or price volatility of natural gas, for which there is plenty in storage, but of adequate dispatchable gas-fired generating capacity.

Germany has had the luxury of being able to make this work due to its interconnections with other countries in Europe that have stronger generating-capacity profiles, including France, where nuclear power still makes up a large portion of baseload generation alongside non-hydro renewables. Norway, which has abundant hydropower resources, also is critically important as a supplier to Germany. However, with the general trend in Europe toward much greater reliance on intermittent renewables, other countries are competing with Germany for power imports on days when Europe has uncooperative weather. Seasonally, wind typically makes up for some of the decline in solar generation in the fall and winter, but as we have seen, that is not always the case.

It is not clear that Germany’s neighbors are all going to continue to subject their own ratepayers to this situation. In Norway, which considers abundant and cheap hydropower to be a competitive advantage for their economy, Energy Minister Terje Aasland said last week that the rise in energy prices had created a “s*** situation.” There is an emerging left-right political consensus around cutting off Norway’s electric grid interconnection with Denmark when the current agreement expires in 2026 and renegotiating their power agreements with Britain and Germany. Electricity prices in southern Norway last week were the highest ever, exceeding even the records set in 2022 during the opening phase of the Ukraine War.

The implications of this for Germany, Norway, and Europe as a whole for economic competitiveness are troubling. The percentage of intermittent renewables in Europe’s power mix is set to keep inching up under the current climate-change policy as long as there is no addition to nuclear capacity. Electricity demand, which had long been in gradual decline based on increased energy efficiency, is now likely to start creeping up again, given the demands on the grid of artificial intelligence and the data centers necessary to support it. Norway is tempted to adopt a “beggar thy neighbor” policy to enhance its competitive advantage in this regard. Germany and much of the rest of Europe face a loss of industrial competitiveness. 

Eventually, the reliability problem will have to be solved, either through investing in gas-fired firming capacity, nuclear generation, or grid-scale battery storage, which, with current technology, is not a good option for the full firming requirement. Bringing nuclear capacity back into the mix in Germany is clearly the best approach, but it will probably take some additional economic pain and deindustrialization before German politics catches up with that reality.

Greg Priddy is a Senior Fellow at the Center for the National Interest and does consulting work related to political risk for the energy sector and financial clients. Previously, he was director of global oil at Eurasia Group and worked at the U.S. Department of Energy.

Image: Kaisn / Shutterstock.com.