Nordic electricity prices slipped below zero and German power turned negative for some hours, as strong production from wind farms overwhelmed the region’s grids.
(Bloomberg) — Nordic electricity prices slipped below zero and German power turned negative for some hours, as strong production from wind farms overwhelmed the region’s grids.
Negative prices are occurring more frequently after the continent added more green power to cut demand for gas and as more extreme weather is producing a prolonged period of strong summer winds. In Germany, wind-power generation is expected to reach around 47.4 gigawatts on Monday, according to Bloomberg’s wind model, approaching a record.
The average Nordic day-ahead power dropped to -€4.14 a megawatt-hour on the Nord Pool AS exchange. German electricity from midday to 5 p.m. for Tuesday was negative.
Sub-zero prices are a preview of what’s to come for European markets if a flood of planned renewable production isn’t met with a shift in demand. The mismatch may prove a headache for policy makers and companies until bigger electric car fleets, smarter grids and better battery technologies catch up.
“The increase in negative prices, which has been noticeable across northwest Europe this summer compared with previous years, is generally due to the rising penetration of renewable energy and continued demand loss,” said Sabrina Kernbichler, an analyst at S&P Global Commodity Insights.
Power output can be inflexible — especially with subsidies to encourage more renewable producers — and sometimes it can be cheaper for a plant to pay consumers to use more electricity than it would be to shut down for an hour or so. And some renewable power, like rooftop solar, gets paid regardless of the market price. That helps to push prices below zero.
Negative prices should become more common without a significant shift in consumption, and European solar installations are set to climb by a third from last year’s record according to HSBC Holdings Plc. That could create an opportunity for consumers to use more energy in the middle of the day to charge cars and run their business at the cheapest and greenest times.
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