Fraunhofer Study Reviews Increase of Negative Price Periods on German Electricity Market

As a recent analysis by the Fraunhofer Institute for Solar Energy Systems points out, the hours in which buyers on the EEX spot-market get paid for consuming energy doubled to 36 hours in the first half-year of 2013.

The study was commissioned by the parliamentary group of the Greens (Bündnis 90/Die Grünen).

Negative prices are only one element introduced by renewables. Another element is extremely low electricity prices. During 196 hours from January to June 2013, the price went below 1 ct/kWh. The figure was four times higher than in 2012. At the same time, also the electricity export increased by nearly 400% to 778 gWh.

The main reason for these pricing effects is the combination of guaranteed priority feed-in for renewables combined with inability to quickly reduce the electricity production of some conventional plants. In times of negative prices, lignite fired power plants continued production at at least 42 % of their installed capacity, nuclear power plants even at at least 49%. Generation from gas power was instead reduced to 10 % of the installed capacity during times of negative spot-market-prices.

As a consequence, coal-based electricity generation increased by 2 tWh to a generation of 72 tWh, lignite production even by 4 tWh to 57 tWh. On the other hand, production from gas fired power stations fell substantially by 4.6 tWh to 22 tWh. The increase in coal energy production is supported by falling global coal prices and the historically low prices for CO2 emission certificates.

The renaissance of coal-based energy production is difficult to align with CO2 reduction targets, as their CO2 emissions are about twice as high as those from gas plants. Existing gas plants are prompted to leave the market, and investments into new gas plants become unprofitable. Yet gas plants are crucial to balance the highly volatile supply from renewable sources in the future.

The authors of the study are therefore highly critical of the trend of higher coal-based electricity production. Because flexible gas fired power plants are pushed out of the market, the fleet of conventional power plants on the whole becomes less flexible. This development is counter-productive, as a more flexible electricity production would be needed to balance the unsteady supply from renewable energies. The study therefore asks for early coordination between the construction of renewable energy plants and the adjustment of existing conventional utilities, as they consider this vital for the success of the Energiewende.

Sources: Fraunhofer ISE, FAZ

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