• Europe has made substantial investments in green energy infrastructure to reduce dependence on Russian gas, according to Insider
Energy in Europe is increasingly trading at negative prices amid massive solar and wind production in the region, writes Business Insider.
Recently, Bloomberg reported that the price of electricity in several markets had fallen below zero. For example, on Tuesday in the German Futures Market the price of electricity was negative for six hours taken individually, according to data from the European Power Exchange (EPEX SPOT).
But as tariffs are usually agreed in advance, this does not mean that households receive refunds for their energy use. Day-ahead auctions are for raw energy, and negative prices in this market signal a significant imbalance between electricity demand and supply, caused by massive solar and wind power generation at the same time.
This situation comes after Europe has made substantial investments in the infrastructure necessary for green energy production, with a record number of solar panels being installed on the continent last year, to reduce dependence on Russian natural gas.
Germany stands out as having installed more solar generation capacity than consumer demand. Thus, in 2023, the country's solar capacity had reached 81.7 gigawatts, exceeding the manifested demand of 52.2 gigawatts, according to a May report by the economic research firm SEB Research.
According to Bloomberg, German wind production was expected to reach its highest level in four months in the middle of this week. In France, too, energy prices turned negative this summer, which led to the shutdown of nuclear power plants in June. Incidentally, reactor shutdowns are not uncommon, also taking place in Spain or Scandinavia.
According to SEB Research, one of the reasons why solar and wind power generation creates such inefficiencies is the lack of battery technology to store the electricity produced. This means that consumers may not even benefit from lower prices for the next day, as energy consumption is often higher during non-solar hours. The report also points out that capping prices can ultimately lead to a decrease in investment in solar energy production infrastructure. Instead, it would be beneficial if more funds were channeled into storage batteries and the grid.
But this does not mean that Europe's appetite for solar power generation is diminishing.
According to Reuters, Eastern European countries are now expanding their solar capacities. In the first seven months of the year, solar production increased by 55% compared to the previous year in Austria, Bulgaria, Hungary, Romania and Poland, writes Business Insider.
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