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Renewables Driving Electricity Prices below $0 Some Afternoons (& Cutting into Baseload Power Plants’ Market Share)

Renewable sources of energy such as solar and wind have been outstripping the electricity supply of traditional baseload (coal, nuclear, and some natural gas) power plants during daytime, especially afternoons, in some renewable-leading countries of late. One reason for this is: electricity demand tends to increase during the sunniest (the hottest) hours, and solar power plants generate more electricity when it is sunnier, which is right on cue.

Not perfectly, but solar power production tends to follow electricity demand. This is especially true in the warmer temperatures, since air conditioners (which consume a lot of electricity) are turned up to compensate for the hot afternoon weather.

Importantly, as solar power plants outstrip the power production of baseload power plants, electricity is sold for a lower price than baseload power on the spot market. On April 1 of this year, not even that hot of a day, the price of electricity on the European Electricity Index (ELIX) actually dropped to -0.01.

ELIX Spot Market Prices at End of March & April 1

Solar Power Generation on April 1

As you can see in the graph above, solar power production is highest during the most sunny late-morning and early afternoon hours, starting at 9 AM. This translates into more power for air conditioners just when they need it most. And as you can see in the table above, it was towards the end of solar’s peak on the afternoon of Sunday, April 1 that solar power actually helped to drive the price of electricity to a negative amount.

Chart of Wind Power Production in Germany on April 1

Importantly, wind power generation, complementary to solar, is greatest at night, and is at its lowest in the morning. Wind starts to increase in this graph at 10 AM, and starts to taper off after 10 PM. The greatest period of wind power generation shown in this graph is from the early afternoon to 10 PM. This helps to back up solar panels because solar power production decreases when wind power generation is increasing, and wind farms generate the most electricity when solar panels generate the least, which is at night.

And, as you can see, the crossover point in the early afternoon, when both energy sources are going fairly strong, is when electricity dropped to a negative price on ELIX on April 1.

Baseload Weaknesses

Most baseload power plants take a long time to adjust, which means that they are not able to adjust quickly to unexpected fluctuations in electricity demand, despite the fact that the amount of electricity a power plant produces should to match electricity demand as closely as possible.

If power plants generate too little, there will be shortages. If they generate too much, electricity goes to waste because it is not used, and is not stored. And, in some extreme cases, we see such cases as that one above, in which electricity can go below the price of $0.

That traditional baseload power plants are not able to adjust their power production much to compensate for spikes and dips in electricity demand is a real weakness of those power generators, because unlike wind and solar, their fuel costs money to burn. So, when fuel-free supply increases and drives down the price of electricity, these power plants can’t cut their generation and have to sell electricity for a considerable loss.

Making More Use of Solar & Wind’s Complementary Nature

As helpful as the complementary electricity generation patterns of wind and solar power plants can be, it is possible to benefit from this pattern far more by planning and programming appliances to perform tasks which do not have to be done at specific times (i.e. washing clothing, drying clothing, washing dishes, heating water for various activities, and more) for times when wind and solar power generation are greatest.

This form of what I would call ‘advanced load balancing’ may be the key to reduced energy storage requirements for wind and solar power plants, and could offer great benefits to society.

h/t Renewables International
Images: Solar Power Plant via Bert van Dijk; other images via EEX

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