High levels of variable renewable generation and reduced power demand due to Covid-19 triggered record levels of negative power pricing across Europe this year, according to a new report.
A study by EnAppSys showed that in the nine months to September 2020, European countries on average saw negative day ahead prices almost 1% of the time (0.8% on average).
These levels were typically three to four times higher than those seen between 2015 and 2018, and more than twice those in 2019.
Markets with high wind generation, such as Ireland, Germany and Denmark, have been “particularly affected by negative pricing as peak levels of wind output started to outpace the Covid-19-influenced levels of demand for power consumption”, EnAppSys said.
Germany experienced negative prices of -€83.94/MWh for eight hours on 21 April, the analyst found.
Within this eight-hour period, solar and wind generation covered around 88% of Germany’s demand.
Belgium also saw “particularly low prices” as the combination of high nuclear and solar generation have at times oversupplied the market during periods of low demand, with prices dropping to -€115.31 Euro/MWh on 13 April.
The amount of overall energy demand covered by wind generation reached 49% in Denmark, 36% in Ireland and 27% in Germany, the highest three rankings in Europe.
Ireland saw negative prices for 4.2% of the time, well above the norm for Europe, EnAppSys found.
EnAppSys business analyst Alena Nispel said: “In such an event, generators will stop producing power if production costs get too high, making it unprofitable in the long run – as a result, the energy supply is reduced.
“Consumers are being paid in order to increase energy demand.
“However, the price we pay as consumers at home is not the same as the price the market pays. Instead, a fixed value that smooths out the extreme prices is more typically used.
“If the frequency of these events increases, it may become the norm to move away from the fixed value in the future and instead use more power when the market is oversupplied and less when power is at a premium.”
Nispel added: “Despite this, it is worth bearing in mind that 2020 has been a unique year.
“The combination of increasing interconnection between the participating markets, a higher share of renewable output and lower demand due to Covid-19 in the first half of 2020 made the market much more volatile.”
Nispel said intermittency of renewables posed a “key challenge”.
Nispel said: “Where the average output of a solar panel over a year might be 8% or the average output of a wind farm is around 30%, the peak output values will be very close to 100% of the potential output.
“The levels of demand for electricity are similarly intermittent.
“In the past it was possible to pair intermittent demand for electricity against a non-intermittent supply of generation (coal/ gas power stations) but pairing an intermittent supply (wind and solar) against an intermittent demand creates challenges.
“These challenges have so far been made more pronounced in 2020 as renewable generation levels continued to climb and demand for electricity declined across Europe as lifestyles changed in response to the Covid pandemic.”
Electricity storage can act to reduce these impacts and new technologies that provide services without producing active power can help to reduce the generation required from conventional power sources, EnAppSys highlighted.
An example can be found in Britain as synchronous condensers are being introduced.
Countries that have not experienced any negative pricing since 2015 are Bulgaria, Greece, Italy, Poland, Portugal, Romania and Spain. The reasons for this activity vary from country to country.
Countries in which renewable generation makes up only a small part of the overall power mix – such as Poland, for example – tend to operate in a less volatile market.
Another example is Portugal, which is connected only to Spain and where negative prices are not possible under the market rules of both countries, EnAppSys said.