Saturday

3rd Jun 2023

Power-price volatility hit EU wind markets during Covid-19

  • Markets with high wind generation levels, such as Denmark, Germany and Ireland were especially vulnerable to negative power pricing (Photo: TAURON Group)

An oversupply of electricity in Europe as a result of the coronavirus crisis has triggered wholesale electricity prices to drop below zero, particularly affecting wind-heavy markets, according to a new report published last week.

An analysis by power market data firm EnAppSys revealed that in the first nine months of 2020, European countries on average saw negative prices almost one percent of the time.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

  • The graph shows the total number of hours of 'negative day ahead prices' in the markets from January to September 2020 (Photo: EnAppSys)

That is three to four times higher than levels seen between 2015 and 2018 and more than twice those in 2019.

Negative power pricing occurs when the market cannot use as much power as generated. Electric power plants cannot always be easily paused and started again and, accordingly, it might be cheaper to pay consumers to use electricity rather than charge them.

However, negative prices only occur on the wholesale exchange and, therefore, retail consumers do not benefit from these changes in market prices.

Nevertheless, power plants try to keep hours with negative prices as minimum as possible because paying consumers raises overall costs and logistics.

"It is worth bearing in mind that 2020 has been a unique year," warned Alena Nispel, business analyst at EnAppSys.

The markets have become "much more volatile" in 2020 due to the lower power demand during Covid-19, higher volumes of renewables output and increasing interconnection between markets, added Nispel.

Meanwhile, markets with high wind generation levels, such as Germany, Denmark and Ireland, were especially vulnerable to negative power pricing.

The reason is that peak levels of wind output started to outpace power-consumption demand amid the Covid-19 pandemic.

"It is here that we see one of the key challenges of renewables: their intermittency," said Nispel, referring to both production, which mainly depends on natural conditions, and demand.

Electricity storage from renewables could reduce these impacts "at least as far as it is economically sensible to do so," she said.

In contrast, the analysis also indicates that countries in which renewable generation makes up only a small part of the overall power mix, for example Poland, tend to operate in less volatile markets.

Given that negative prices are not possible under the market rules of Portugal and Spain, they are among the countries that have not experienced any negative pricing since 2015 - together with Bulgaria, Greece, Italy, Poland and Romania.

With the capacity of renewables projects expected to grow exponentially in the coming years, the trends identified during 2020 expose some of the challenges ahead.

As part of the European Green Deal, the European Commission will put forward an offshore renewable energy strategy before the end of the year.

"The benefits from investing in renewables at this time of recovery are significant for the economy, for the consumers and the environment - focusing on solar, wind and hydropower would create local green jobs and allow the region to gain from closer energy cooperation," said the EU energy commissioner Kadri Simson on Friday.

In central and southeastern European countries, for instance, it is estimated that the deployment of renewables energies could cover 34 percent of energy demand by 2030.

Why is Netherlands so far behind on renewables?

Despite its historic connotation with windmills and dams, the Netherlands is in fact far behind most EU countries in the production of energy from renewable sources - alongside stragglers such as Malta, Luxembourg and Belgium.

Renewables roll-out needs faster pace to reach EU goal

In 2017, 17.5 percent of the EU's energy consumption came from renewable sources, while the target is 20 percent by 2020. Brexit may actually help achieve that target - but only through a statistical sleight-of-hand.

Analysis

Why is EU off track for 2020 energy efficiency target?

Most EU member states are likely to miss the 2020 target on energy efficiency, since they were not legally-binding targets. "Transformative" measures are needed to reduce energy consumption while boosting efficiency, experts say.

Analysis

The controversy behind the Energy Charter Treaty reforms

Experts from several organisations say that reform of the Energy Charter Treaty, proposed by the EU Commission, will make it difficult to meet the targets agreed in the Paris Agreement - making it an obstacle to the clean-energy transition.

EU unveils €800bn offshore renewables plan

The European Commission aims to increase the bloc's wind energy production at sea massively, reaching at least 300 GW by 2050 - a 25-fold increase from the bloc's current offshore wind capacity of 12 GW

EU: national energy price-spike measures should end this year

"If energy prices increase again and support cannot be fully discontinued, targeted policies to support vulnerable households and companies — rather than wide and less effective support policies — will remain crucial," the commission said in its assessment.

Opinion

EU export credits insure decades of fossil-fuel in Mozambique

European governments are phasing out fossil fuels at home, but continuing their financial support for fossil mega-projects abroad. This is despite the EU agreeing last year to decarbonise export credits — insurance on risky non-EU projects provided with public money.

Latest News

  1. Spanish PM to delay EU presidency speech due to snap election
  2. EU data protection chief launches Frontex investigation
  3. Madrid steps up bid to host EU anti-money laundering hub
  4. How EU leaders should deal with Chinese government repression
  5. MEPs pile on pressure for EU to delay Hungary's presidency
  6. IEA: World 'comfortably' on track for renewables target
  7. Europe's TV union wooing Lavrov for splashy interview
  8. ECB: eurozone home prices could see 'disorderly' fall

Stakeholders' Highlights

  1. International Sustainable Finance CentreJoin CEE Sustainable Finance Summit, 15 – 19 May 2023, high-level event for finance & business
  2. ICLEISeven actionable measures to make food procurement in Europe more sustainable
  3. World BankWorld Bank Report Highlights Role of Human Development for a Successful Green Transition in Europe
  4. Nordic Council of MinistersNordic summit to step up the fight against food loss and waste
  5. Nordic Council of MinistersThink-tank: Strengthen co-operation around tech giants’ influence in the Nordics
  6. EFBWWEFBWW calls for the EC to stop exploitation in subcontracting chains

Stakeholders' Highlights

  1. InformaConnecting Expert Industry-Leaders, Top Suppliers, and Inquiring Buyers all in one space - visit Battery Show Europe.
  2. EFBWWEFBWW and FIEC do not agree to any exemptions to mandatory prior notifications in construction
  3. Nordic Council of MinistersNordic and Baltic ways to prevent gender-based violence
  4. Nordic Council of MinistersCSW67: Economic gender equality now! Nordic ways to close the pension gap
  5. Nordic Council of MinistersCSW67: Pushing back the push-back - Nordic solutions to online gender-based violence
  6. Nordic Council of MinistersCSW67: The Nordics are ready to push for gender equality

Join EUobserver

Support quality EU news

Join us