Negative power prices in Germany “will disappear eventually”

(Montel) Negative power prices will persist in Germany for a while, but its effects can be minimised with widespread metering and better deployment of batteries, according to a panel of experts.

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“We assume that the negative prices will disappear eventually,” said Claus Urbanke, vice president for wind, solar and storage development at Statkraft Germany, speaking at the Aurora Renewables and Battery summit in Berlin late on Tuesday.

But he also noted that the problem is likely to get worse before it is solved.

The number of negative power hours in Germany has skyrocketed in recent years as the country has limited resources to store or transfer a surplus of renewable energy.

There were 301 traded hours with negative prices in the day-ahead market in 2023, according to the BNA regulator. In this year to date, the German market has seen 160 negative hours, based on exchange data.

Regulators want to iron them out of the system, since they reduce incentives to invest in more renewable energy – something Germany needs to reach its climate targets.

“We simply can’t have negative hours,” said Philipp Nimmermann, the economics and energy undersecretary at the economy ministry, speaking at the same event. “It’s absurd.”

Cannibalisation and bottlenecks
Wind and solar power profits suffer from a cannibalisation effect, as the capacities within a country largely generate at the same time when the sun shines or the wind blows, slashing short-term prices during production peaks.

The problem gets worse when neighbouring countries build out renewable capacities. Solar profits suffer more in such scenarios than wind, since peak hours are often the same in neighbouring countries, which is not always the case with wind, according to a study by the Berlin-based think tank Neon published on Monday.

German neighbours like the Netherlands or Poland have seen a sharp rise of solar capacities recently – which put pressure on day-ahead prices during periods of peak sunshine and limited demand.

Statkraft’s Urbanke pointed out that power prices near zero are also disruptive to energy production profits.

He said one solution would be to introduce smart metering in German homes and businesses. Installation has been slow in Germany compared to the rest of Europe, and ideally, he said, consumption is timed to match peak output hours.

Flexible demand could also stem from energy storage, such as hydro pumps or batteries. While Germany’s hydro pump storage potential is limited, companies like Uniper are seeking at battery solutions.

Speaking at the same event in Berlin, Katja Wuenschel, CEO of RWE Renewables Europe and Australia, pointed to the need to build out transmission lines so that the renewable energy can be sent directly to industrial south.  At least three are currently under construction.

Any surplus electricity produced by Germany’s massive fleet of wind turbines in the north struggles to reach the industrial demand in the south due to delays in the expansion of transmission lines linking both sides.