Power prices in Europe dropped below zero to record-low levels during the weekend as a surge in solar generation pushed supply above demand.
(Bloomberg) — Power prices in Europe dropped below zero to record-low levels during the weekend as a surge in solar generation pushed supply above demand.
With an increase in the number of solar panels across the region, power grids from Britain to France and Denmark are being overwhelmed by cheap supplies. Prices settled at -€500 a megawatt hour for some periods in Germany and the Netherlands in an auction for Sunday on Epex Spot SE. Several periods on Monday were negative too, a more unusual occurrence for a weekday when demand is higher.
Negative prices are common in the summer and during public holidays if it’s particularly windy but now solar panels are causing the same surge. Grid managers have the option to pay to turn down supply or boost demand. The surge of clean electricity has outstripped demand, showcasing power grids’ struggle to accommodate large variations in renewables.
Prices returned to positive levels on Monday with day-ahead prices jumping from the lows of the weekend. Still, in Denmark and Germany, electricity traded as low as €0.06 a megawatt hour during the peak solar production period in the early afternoon.
“We’ve seen a boom in solar around central Europe, which plays a big role when it comes to how power prices evolve,” said Andreas Gandolfo, analyst at BloombergNEF. “Expect to see more and more of these negative prices. This will happen for the entire month and August.”
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Still, prices settled below zero for delivery Monday afternoon in Germany, the Netherlands and Denmark. That will only become more common as Europe presses on with plans to deploy a record amount of solar panels in the coming years to cut demand for fossil fuels that cause climate change.
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