Germany: power prices below zero

Over the past few decades, Germany spent about $200 billion for the promotion of cleaner electricity sources, and as the investment is having an unexpected impact, recently happened that consumers were paid to use power on occasion.

On Sunday 24 December and during the early hours of Christmas Day, in fact, power prices jumped below zero on the EPEX Spot (an European power trading exchange). This was due to low demand, unseasonably warm weather and strong breezes that caused an abundance of wind power on the grid. Negative prices are far from rare in Germany, because of the encouragement the country makes for investments in greener forms of power generation. According to EPEX Spot, indeed, prices for electricity in Germany have plunged below zero more than 100 times in 2017.

Therefore, on Sunday, factory owners and major consumers were paid more than £60 per megawatt-hour.

Obviously, this is caused by particularly low demand on weekends and holidays, when factories are closed. Moreover, Germany’s energy supplies are not as much predictable as they used to be. Wind power, for example, widely depends on changes in weather patterns. Giant spinning turbines usually produce about 12 percent of Germany’s power, although on windy days they can duplicate or triplicate that amount.

In addition, other kind of the country’s electricity supply – coal and nuclear power plants – cannot dial back quickly enough, causing negative prices on electricity trading markets.

Together with Germany, also other countries in Europe have experiences negative power prices, like Belgium, Britain, France, the Netherlands, Switzerland, but in rare occasions.

During the last weekend of October, power prices spent 31 hours below zero, dipping at one point at minus £98, per megawatt-hour, a wholesale measures.

Further, negative prices means that Germany’s power grid has not adapted to the increasing amount of renewable energy being produced. Technological improvements that would help store additional power and that would provide a better distribution of power across and between countries are still being developed. Nevertheless, regulatory amendments could make a difference, as Germany still does not encourage customers to increase their use at times of oversupplies.

 

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