Clean Power

Published on December 29th, 2012 | by Zachary Shahan


Negative European Power Prices Seen Sunday Through Thursday Due To Strong Wind Power Supply

December 29th, 2012 by  

The European Energy Exchange has seen the price of electricity turn negative during certain hours of the day Sunday through Thursday of las week. This is largely due to a strong supply of wind power combined with relatively low electricity demand, which is partly triggered by warmer than average temperatures.

Negative prices are expected to return again Sunday through Tuesday.

We’ve reported on such occurrences before, but this is still something that I’m sure many people are unfamiliar with, so let’s run through a quick rehash:

On the wholesale electricity market, the lowest bidder looking to supply the grid with electricity wins. Since wind and solar power have fuel costs of $0, they can bid lower than coal, natural gas, nuclear, etc (which do have fuel costs) — naturally, this brings down the price of electricity on the wholesale market.

When the supply of solar and wind rises and electricity demand drops, the effect is strengthened.

Furthermore, with subsidies for wind and solar power production, wind and solar power producers can actually bid below $0 per unit of electricity and still make a profit. We’ve seen in happen in Germany due to high solar power production in the spring and summer, and we’ve seen it happen in Texas due to high wind power production, and it has happened many other places as well.

Wind, solar, and low demand aren’t the only causes of this phenomenon, however. Nuclear and hydro are also often implicated. Nuclear and hydro power plants can’t easily shut down or start up, so it may be more worth it to them to pay a little to put electricity on the grid for a short time than lose revenue from being shut down when it could be selling electricity for a profit.

Negative pricing isn’t that big of an issue, of course, but it’s an indicator of the rather noteworthy fact that wind and solar power drive down wholesale electricity prices. Unfortunately, that isn’t always passed on to retail electricity customers.

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About the Author

is tryin' to help society help itself (and other species) with the power of the typed word. He spends most of his time here on CleanTechnica as its director and chief editor, but he's also the president of Important Media and the director/founder of EV Obsession, Solar Love, and Bikocity. Zach is recognized globally as a solar energy, electric car, and energy storage expert. Zach has long-term investments in TSLA, FSLR, SPWR, SEDG, & ABB — after years of covering solar and EVs, he simply has a lot of faith in these particular companies and feels like they are good cleantech companies to invest in.

  • Hi,

    I think you are a bit wrong here. The negative prices are regulatory issue in Germany and not the open market fact. If the wind blows the electricity from wind should be used, by market rules. The negative prices are paid by TSO in order to balance (increase demand to meat supply) their network.

  • So the shift between low and high (hourly MWh in euros) is about sat thru friday 27, 24, 18, 486, 220, 45, 52. Surely there is money to be made there with storage. Texas is seeing something similar, but not the wild a difference. So for either a wind farm owner (holding power sell when high) or a peak industrial user (buy low, don’t pay peak), there is a lot of money on the table. Even if I assume only one charge/discharge cycle per day. Ok maybe it was a good week but assuming (x% lost per cycle) a 1MWh system would have made the follow euros that week. 784.50(10%), 697.60(20%), 627.84(30%).

    Form EOS papers
    Eos has developed a safe, reliable, non-toxic, non-combustible, low cost zinc energy storage system for the electric grid that can be sold for $1000/kw and $160/kWh, rechargeable over 10,000 cycles (30 years)
    Eos is scaling up battery prototypes to 100 kWh units in 2012 in preparation for manufacturing and delivery of MW scale systems to customers in 2013. I will also map the $1/kWh and the 15/kWh that is the US DOE goal.

    $160, $15, $1 USD give 121.01(A) 11.34(B) 0.76(C) euros

    So how many of this week to payoff the system (not counting interest)
    (A) (B) (C)
    10% 154 14.4 1.0
    20% 174 16.3 1.1
    30% 193 18.1 1.2

  • patb2009

    wind oftentimes has production credits, so they can afford to go negative at times.

  • jonesey jonesey

    Some hydro facilities also have to keep generating during high spring runoff flows (which sometimes coincide with high winds) because spilling water instead of running it through generators results in dissolved gas levels that are unhealthy for legally-protected fish. This happens in the US Pacific Northwest.

    Utility customers who can (a) arrange to pay market prices for power and (b) shift significant amounts of load to these negative cost times may be able to save a bundle on electricity costs.

    Electrical power storage and demand response will also help us get through these times as well. If utilities can help customers time their usage such that batteries (of whatever sort, including EVs and hot water tanks) can be charged during these times, those utilities will be able to keep their overall rates low by buying this negatively-priced power.

  • ThomasGerke

    Zach, I have a little comment:
    It is true that negative prices occure at times of high wind / solar production, but wind and solar are not the cause. Negative prices occure when base load powerplant operators decide not to power down their plants at times of high wind / solar power production.
    They prefer to pay people to take their coal/nuclear power because in their mico-economic business logic powering a power station down & up is more expensive. So they prefer to flood & block the super high voltage transimission grid with their electricity.

    Unfortunatly most commentators put the “blame” for those “strange market failures” on wind power, when in fact it’s a systemic conflict.

    I’ll write on this in the coming days 😉

    • Dimitar Mirchev

      True but in 5 years renewables will produce more power than the demand even with base-load stopped.

      • ThomasGerke

        I doubt that it will happen that soon, but by 2022 it propably will from time to time.
        Overall this developement is not a problem though, but part of the process of transforming the entire energy system (what Germany is doing). At least not from a technological / macro-economic point of view.

        • Dimitar Mirchev

          Enough with the pessimism 🙂

          For one:

          In 2017 the TSO expect an installed capacity of renewable energy sources of 111,358 MW, up almost 28% from the expected 80,622 MW at the end of 2013. Solar power and wind power are believed to account for 91% in 2017 (solar: 54,838 MW, wind onshore: 38,747 MW, wind offshore: 7,853 MW).

          Which is enough to beat the demand on holidays.

          • ThomasGerke

            That’s true of course… the die is cast for this decade and it will be glorious. The decline of baseload power… the fall of the cash cow on which the energy-industrial complex build their highly profitable business model through decades of subsidies and far too close ties with regulators.

            How ever there are well organized economic interessts working around the clock to shape the next decade to their liking… so one should never stop thinking about the next step. 🙂

          • Dimitar Mirchev

            Yeap. They will try to preserve their profits but as I see it the next step is going to happen behind the meter. And the harder the utilities and the big corporations push the faster we will switch to energy positive buildings, community renewables, grid storage in the basement, etc etc.

            Imo this is going to be huge in USA where as I understand it is hard to get good net metering going.

          • Bob_Wallace

            One of the real fun things to watch for is what happens in Georgia when/if their new reactors come on line.

            The state has already allowed the utility company to overcharge customers so that customers’ money is used for part of the construction expenses. Unless a miracle occurs rates will get bumped up again when the reactors come alive.

            That’s likely to be 5 to 10 years from how. By then installed solar should be closer to $1/watt than $2. We may have affordable storage. A lot of customers may decide to set up their own solar + storage systems and use the grid only as backup. (The utility company seems to have made it impossible for end-users to sell power to the grid.)

            And/or there may be a customer revolt.

    • i mentioned that a bit at the end, but yeah, probably underplayed it: “Nuclear and hydro are also often implicated. Nuclear and hydro power plants can’t easily shut down or start up, so it may be more worth it to them to pay a little to put electricity on the grid for a short time than lose revenue from being shut down when it could be selling electricity for a profit.”

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