Coronavirus slump will lead to more hours of negative power prices in Germany – study

The drop in electricity demand driven by the coronavirus pandemic will likely lead to more hours of negative wholesale electricity prices in Germany this year, according to an analysis published by the energy consulting firm enervis. That could lead to revenue losses for renewable power producers, the firm says. Enervis expects German electricity use to drop by about six percent as industry and businesses reduce operations, pv magazine reports. That, combined with high wind and solar production, will turn power prices negative more often as electricity generation outstrips demand, the firm says. “Electricity prices are formed in the balance between supply and demand and demand is currently declining significantly, while supply, especially from renewable energies, continues to be available on the market,” said enervis consultant Tim Steinert in a press release. “This means that the hours are now increasing in which a high feed-in of renewable energies, especially from wind energy, meets low demand for electricity and leads to negative spot prices." The firm expects the number of hours with negative prices to increase by 80 to 150 percent, pv magazine reports. Steinert said the previous month offered a preview of what may lie ahead: in March 2020, the market logged about 130 hours of negative prices, mostly during periods of high wind production; that was up from 90 hours in March 2019. Because some renewable power producers are not compensated for negative price periods that last more than six hours, the increase could lead to significant revenue losses, enervis says. 

The rising share of renewable power has made wholesale power prices much more volatile in Germany and negative prices have become a fairly common phenomenon. Because large-scale power storage is not currently possible in the German electricity system, the amount of electricity fed into the system and the amount used have to be kept equal to maintain a stable frequency on the grid. When supply outstrips demand, power suppliers have to pay their wholesale customers to buy electric energy, resulting in negative power prices. Meanwhile, experts are predicting the coronavirus pandemic will cause a deep economic slump and lower carbon emissions in Germany.