Within the EU, countries that allow negative electricity prices in electricity market rules include France, Germany, Austria, Switzerland, Belgium, and the Netherlands which have joined the European electricity trading market EPEX. Other electricity markets do not allow wholesale electricity prices to fall below zero.
The energy thinks tank Ember shows that renewable energy is increasingly dominating the EU power market. In 2022, the proportion of wind and solar power generation in Europe will reach a record 22%, surpassing fossil gas (20%) for the first time and again. over coal (16%). When more and more volatile green electricity floods into the grid, price fluctuations are also increasing. In the European electricity spot market, there will be situations where electricity prices are extremely high or extremely low, and negative electricity prices have also become a frequent phenomenon. The phenomenon.
Why are there negative electricity prices? The European Power Exchange Center has given a definition: “Negative electricity prices are price signals in the wholesale electricity market when highly inflexible generation meets low demand.”
Negative electricity prices are essentially periodic excess electricity supply. When the supply exceeds demand in the electricity market, the market settlement price is negative. The background of the emergence of negative electricity prices is that more and more renewable energy sources are connected to the grid. The output curve of traditional power units matches the power load. With large-scale and highly volatile power sources such as photovoltaics and wind power connected to the grid, it is becoming more and more difficult to match output and load.
When a large amount of power generation, especially renewable energy, is sufficient and power demand is low, there will be negative electricity prices in electricity transactions. In Europe, negative electricity prices usually occur during sunny or windy holidays and low-load periods (such as Christmas and other public holidays), and the decline in industrial electricity demand has caused short-term oversupply in the electricity market.
Negative pricing is a complex phenomenon and the source of much controversy. The German industry believes that this is one of the manifestations of the conflict between the old energy system and the new energy system. The phenomena that have emerged in the transition to weather-based, renewable-dominated power systems are the result of the flexibility of existing generation facilities as well as insufficient demand-side flexibility.
When the electricity price is negative, there are still a large number of power plants that continue to generate electricity, because the shutdown and start-up costs of conventional power sources, especially nuclear power plants, are too high, and the standby units of the system cannot be stopped. Power generation, these problems are caused by the lack of flexibility of the energy system.
the German Ministry for Economic Affairs and Energy (BMWi) has shown that “greater flexibility” is key to preventing more negative electricity prices in the future. Energy system flexibility refers to the ability of an energy system to flexibly change energy production and consumption in response to external signals (price signals or activations).
There are many ways to improve the flexibility of the energy system. On the one hand, it is on the power supply side, such as increasing the flexibility of conventional power plants, increasing the controllability of renewable energy installations, and non-fluctuating renewable energy such as biogas and hydropower; on the other hand, on the load side. , realize electricity-to-heat, electricity-to-gas, etc., and add more and more energy storage, and more cross-border grid connections with neighboring countries can help alleviate the imbalance between power supply and demand.
More energy storage systems, smarter grids, developed virtual power plant networks, and more flexible traditional producers. Continuously improving the flexibility of the energy system can not only help to play the role of the spot market, but also prevent negative electricity prices. It is one of the key measures for the success of the energy transition. This will become increasingly important as more and more renewable energy comes online.