Germany powers Europe’s clean energy shift via cross-border trading

Renewable energy growth and the need for system flexibility in the EU

The expansion of renewable energy within the European Union continues to gain momentum. Nearly 45% of electricity demand is now met by non-fossil sources. However, the integration of large volumes of fluctuating generation from wind and solar power is only successful if the power system offers sufficient flexibility.

Why is cross-border electricity trade vital for Europe’s energy transition

While energy storage and demand-side management are critical, cross-border electricity trading offers an equally powerful tool for enhancing system flexibility. By efficiently using generation capacities across national borders, this approach strengthens energy security and supports a resilient, crisis-proof electricity supply.

Germany’s central role in European electricity trading

Germany as a power trading hub in Europe

Thanks to its central geographic location and interconnections with 11 neighbouring countries, Germany acts as a vital electricity trading hub between Central and Northern Europe.

Shift from net exporter to net importer in 2024

Germany has traditionally exported more electricity than it imported. However, in 2024, it became a net importer—highlighting changing dynamics in the regional power system.

How does cross-border electricity trading work?

Cost-efficient power flows across national borders

Electricity is traded when a neighbouring country can meet demand at a lower cost. This results in a welfare-optimal outcome by minimising the overall cost of electricity generation across countries.

Interconnection capacity and market coupling in Europe

The physical ability to trade electricity depends on interconnection capacities, which are managed via market coupling mechanisms. These ensure coordinated day-ahead and intraday markets throughout the EU.

Market coupling: a foundation for the integrated European power market

System-wide optimisation for power distribution

Market coupling uses a network model to optimise electricity flows, considering grid constraints and power prices. This integrated process improves efficiency and reduces overall system costs.

Misconceptions about electricity imports

Electricity imports do not indicate national weakness; instead, they reflect a sophisticated system of resource sharing across Europe, maximising both economic and environmental benefits.

Germany’s electricity trading with key partner countries

Fig. 1: Cross-border electricity trade of Germany in 2024

Germany – Poland power trade: cost dynamics and coal dependence

Poland’s energy mix and coal dependence

Poland still relies heavily on lignite and hard coal to meet electricity demand. While renewables are growing, they play a relatively minor role in the country’s power generation.

Why Germany exports electricity to Poland

German exports to Poland are not limited to times of high renewable generation. Instead, Germany's gas-fired plants often outcompete Polish coal plants due to EU ETS carbon pricing, making German electricity more cost-effective even during low renewable periods.

Germany – France power trade: leveraging nuclear energy

France’s nuclear dominance in power generation

France relies on nuclear power for around 70% of its electricity, allowing it to export to Germany during times of high demand or low renewable output.

Import patterns from France to Germany

Germany tends to import French electricity during high-price, low-renewable periods, taking advantage of France’s low marginal generation costs from nuclear energy.

Germany – Denmark power trade: wind power and strategic connectivity

Denmark’s role as a renewable energy connector

Denmark has a high capacity of wind-based renewable generation and acts as a bridge between Scandinavia and Central Europe, facilitating efficient power flows.

Why Germany imports more electricity from Denmark

Germany consistently imports electricity from Denmark, particularly due to Denmark’s access to low-cost hydropower from Nordic countries and its transit role in regional trade.

Cross-border electricity trading as a pillar of the EU energy transition

Enhancing resilience, cost efficiency, and sustainability

Cross-border trade is central to achieving a sustainable, flexible, and low-carbon European energy system. Each country contributes unique strengths—be it coal, nuclear, or renewables—which, when interconnected, form a more resilient whole.

Germany’s responsibility and opportunity in Europe’s energy future

Germany's geographic and infrastructural position makes it both a beneficiary and a leader in shaping the continent's energy future. Continued investment in grid infrastructure, market harmonisation, and cooperative mechanisms will be vital to achieving Europe’s climate goals.