Europe is highly interconnected with countries exporting a large share of their electricity production and others importing a large share of their electricity consumption. These exchanges are influenced by various factors, including weather, prices, policy, and geopolitics, which alter the energy landscape throughout the year.
Over the past two years, Sweden has consistently been one of the primary exporters of electricity while Italy has remained the main importer for the majority of quarters. Germany has primarily been an importer, however demonstrates seasonal fluctuations, while France which was the main exporter of electricity over the last forty years became a main importer in 2022. The next sections will investigate in detail the situation of these four countries.
Electricity production in Sweden is dominated by hydro, nuclear, and wind energy. Hydro and nuclear are dispatchable power sources and allow Sweden to adjust production to their consumption needs. In addition to being low-carbon, these three power sources are cheap. As a result, wholesale electricity prices in Sweden are one of the lowest in Europe, favoring electricity exports to neighboring countries like Finland, Denmark, or Lithuania.
The electricity grid in Italy is separated into six zones, two covering the Sicily and Sardinia islands, and four continental zones. The split of continental Italy into four zones enables it to better reflect local conditions such as the availability of power generation or grid infrastructure, and to increase the market's economic efficiency.
Electricity consumption in Italy was 18% higher than electricity production during the period 2021-2022. This is particularly the case in Italy North (IT-NO), which accounts for more than half of Italy's total electricity consumption. Electricity production in Italy North covered only two-thirds of the electricity consumed during this period. Additional consumption was met by imports coming mainly from France, and Germany via Switzerland.
On the other hand, Italy South (IT-SO) is exporting almost 50% of its electricity production to neighboring zones, mainly the rest of Italy. This highlights a mismatch in the localization of electricity consumption and production in Italy. This mismatch will increase in the coming years with the development of renewables in the south of Italy where renewable potential is larger than in the north of the country.
Terna, the Italian TSO, recently presented its ten-year development plan for the national electricity grid, with over €30 billion in investments. Out of these investments, €11 billion will serve to double the exchange capacity between Italian zones to over 30 GW. These investments aim at improving the reliability of the network, strengthening the connection between north and south, and between the islands and the mainland. This improved interconnection between Italian zones, with a stronger cross-border interconnection, will prepare the grid for the addition of 70GW of renewable energy by 2030 and stay on track with CO2 emissions reduction targets.
The electricity grid in Germany has a large share of wind with a total installed capacity of more than 65 GW. Wind became the second largest source of electricity in the country behind coal in 2022. Electricity generation from wind in Germany shows a large seasonality with greater production in fall and winter and lower power output during summer. This seasonality is also reflected in Germany’s exports which tend to be greater during the colder months when wind production is higher. During winter, Germany is usually one of the top exporters in Europe.
In the spring and summer of 2023, imports increased significantly compared to the previous years due to reduced coal production and the phase-out of the last nuclear power plants in the country. Therefore, it will be interesting to see if wind production will be able to reverse this trend next fall and next winter, and if not, what will be the effect on the rest of the electricity grids throughout Europe.
Nuclear maintenance in France in 2022 had a huge impact on its exports. In the last 10 years, France was the top electricity exporter in Europe thanks to a large nuclear fleet producing low-carbon and low-cost electricity. It exported an average of 46TWh each year between 2015 and 2021.
In 2022, France became a net importer of electricity for the first time in over forty years, as its nuclear production decreased by 21% compared to 2021 due to corrosion issues discovered among its nuclear reactors. While France was exporting electricity to Spain and Great Britain in H1 2021, this trend reversed at the end of 2021 and for most of 2022. A part of the exports to France was leveraged by increased solar production in Spain, but both Great Britain and Spain had to increase their electricity generation from gas to simultaneously meet their consumption, and supply electricity to France. Electricity imported from neighboring countries had a much higher carbon intensity than electricity produced in France causing the average carbon intensity to ramp up from the end of 2021 to the beginning of 2023. In the first half of 2023, France became a net exporter again as nuclear production ramped up and returned to normal levels.
When imports and exports are expressed relative to the total electricity consumption, Bulgaria joins Sweden as the top exporter of electricity in Europe, while Baltic countries dominate the top importers' rankings.
Bulgaria exports a significant amount of electricity to neighboring countries: Serbia, North Macedonia, Greece, Turkey, and Romania (in order of energy volume). Thus, it plays a large role in securing electricity supply in the Balkans region. However, Bulgaria currently faces challenges with the decarbonization of its electricity, as coal represents its largest power source. The Bulgarian government decided to delay plans for coal power plant phaseouts at the beginning of the year following demonstrations from workers in the coal industry.
The delay of coal power plant phaseouts also comes from the profits Bulgaria earned during the energy crisis that followed the Russian invasion of Ukraine. Consequently, Bulgaria is at risk of losing EU funds and grants because of climate inaction,, as well as not respecting EU legal limits on air pollution. Bulgaria’s plans to decarbonize its electricity system rely on increasing deployments of nuclear and renewable energy capacities to reach clean electricity by 2050.
All three Baltic countries are heavily relying on electricity imports to secure their electricity supply. Imports come mainly from Sweden and Finland. Additionally, the electricity grids of Baltic countries are currently physically connected to Russia’s grid, which created additional tensions following the Russian invasion of Ukraine. Their synchronization with the rest of the EU grid is set to happen beginning of 2025.
In 2023, Latvia alternated roles as both a top electricity exporter and a top electricity importer in Europe. Run-of-river hydroelectricity is one of the main sources in Latvia which was highly impacted by record rainfalls and floods end of Q1 2023 and great droughts in Q2 2023. This resulted in massive fluctuations in Latvia’s electricity exchanges while hydropower generation reached a record high in April 2023, and a record low in June. Electricity imports in Latvia mainly come from Sweden and Finland through its interconnection with Estonia highlighting the importance of the latter in the connection between Baltic and Nordic countries.
Lithuania sourced more than 70% of its electricity consumption from imports in 2021/2022, emphasizing a high dependence on interconnections with neighboring countries. Electricity production in Lithuania mainly relies on wind, and since recently solar, which makes it strongly dependent on weather conditions. Like Latvia, baseline generation in Lithuania (mainly gas) is currently insufficient to meet electricity demand. Baltic states are therefore increasing investments in liquefied natural gas to improve their energy security. Wind generation will also continue to play a key role in Lithuania as the country awarded its first offshore wind auction for a total capacity of 700 MW which will be connected to the grid in 2030, almost doubling the current installed capacity from wind power.
With a large installed capacity for shale oil electricity generation and its interconnections with Russia and Finland (which is itself connected to Sweden), Estonia has historically served as a hub for transmitting electricity to the rest of the Baltic countries (Latvia and Lithuania). However, electricity generation from shale oil is highly polluting, and Estonia set targets to end its use by 2035. This target was jeopardized by the cut in electricity imports from Russia following the Russian invasion of Ukraine, and Estonia had to increase its generation from shale oil during fall 2022. Spring 2023 saw electricity generation from shale oil decreasing again supported by the increase in solar generation.
These highlights demonstrate not only Europe’s extensive interconnectivity but also how importers of today can be the exporters of tomorrow consequently due to changes in weather, price, policy, geopolitics, and more. As the volume and fluctuation of these exchanges will likely increase with the development of renewables, it will require more investments in the transmission systems throughout Europe, both in national grids and across borders. For some countries, these interconnections play a significant role in their ability to meet their electricity demand, enhancing the importance of such investments in the near future to simultaneously meet electricity demand and decarbonize European electricity grids.
Net imports are defined as the difference between imports and exports. A positive value means electricity imports are greater than exports, and inversely.