Thursday, January 9, 2014

Europe's storms send power prices plummeting to negative

Karolin Schapps and Vera Eckert in Reuters: North Europe's devastating storms sent wind turbines spinning and helped strengthen a new winter phenomenon for the region - negative electricity prices. Damaging for utilities losing money making electricity, delighting traders who cash in on price swings, they will not, however, mean cheap power for households.

A raft of elements to subsidize the green energy boom make up half of most consumer power bills, shielding them from immediate wholesale market price swings.

Over the Christmas holiday, which typically causes a drop in energy demand, wholesale electricity prices in Germany, the Nordic region, the Czech Republic and Slovakia turned negative on excessive renewable energy production and mild weather.

Wind and rain bring out the best in renewable energy from turbines and hydro power, a major source of Nordic electricity. Calm weather hampers green energy output. Meteorologists say mild and wet weather could continue until March.

When renewable energy output is higher than necessary, as in stormy weather, producers face negative market prices because electricity cannot be stored in high volumes. "I think negative prices will become more common with more wind farms being built. With more wind farms the chances of having supply outstripping demand are higher and this is the cause of the negative prices," said one European power trader....

A windfarm in Germany, shot by Prankster, Wikimedia Commons, under the Creative Commons CC0 1.0 Universal Public Domain Dedication 

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