Large-scale deployment of new facilities renewable energy The incident that occurred in Spain causes an earthquake in the functioning of the electricity market. historically wholesale electricity market -Manufacturers, marketers and traders They buy and sell energy to be consumed the next day; They set their lowest prices in the early morning hours, when demand for electricity is low.
Accelerated expansion of green energies It breaks the traditional trend. Following record electricity prices set during the worst period of the energy crisis (with peaks) over 500 euros per megawatt hourMWh), although the price is relatively moderate remains high compared to pre-crisis levels (currently fixed at between 100 and 120 euros per MWh). What has changed in recent months is generally the hours when the cheapest prices are recorded.
Compared to the decades-long trend that the lowest prices are always concentrated at night due to lower business activity and lower energy consumption, the daily price chart in the last two years shows a different behavior, as can be seen from the 2017 records. Operator of the Iberian Electricity Market (OMIE).
In months with more light hours –especially between April and September – the cheapest electricity prices are clearly concentrated in central hours of the day due to the impact on price formation of the increased production of photovoltaic solar power plants and the explosion in self-consumption.
On the contrary, in autumn and winter – especially Between November and January – lowest quotes relative to the average market price continue to be recorded at dawn due to the reduced predominance of solar energy and fewer light hours at certain times of the year, and the usual higher production of wind energy in these months.
“The new deployment of cheaper electricity hours throughout the year will be permanent and likely to become more severe. “The trend will continue or deepen when there is more solar energy and more wind energy,” he explains. Francisco Valverde, expert consultant on energy and analyzed the evolution of hourly price differences in the electricity market in recent years, which shows how severe the changes have become this year. “In general, electricity will be cheaper during the day on most days in the summer thanks to photovoltaics, and in the winter it tends to be cheaper at night thanks to wind power,” he summarizes.
It is normal that the production of wind farms increases with the arrival of autumn and winter months, because there will be more wind and therefore low prices will begin to be transferred to the clocks. This is the expected development due to the increasing contribution of wind energy, but other factors will influence whether this will occur. “This will depend on the actual wind available, the production of the hydroelectric power plant, the price of natural gas and CO₂ emission rights and its impact on the price of the entire market, the hourly demand for electricity…” he warns. Antonio Delgado Rigal, CEO of consulting firm Aleasoft Energy Forecasting. “The general trend for cheap prices during the day in the summer months is clear, but the forecast for the winter months is more uncertain and there are more factors that determine this.”
electricity zero euro
In fact, in the last few months, new renewable energy sources have become widespread faster than expected, especially when it comes to new photovoltaic plants. The number of hours in which the wholesale electricity market sets zero euro prices is increasing rapidly – more than 60 hours so far this year alone – or demolition prices of just a few cents. The wholesale market sets different prices for each hour of the day, and this year the hours when this price is zero are increasing exponentially.
The electricity market determines prices through a marginal system; This system ensures that the latest and most expensive technology needed to meet demand sets the price for the rest. Some so-called marginal production technologies (rrenewable, nuclear and hydroelectric) enters the market at a zero price, so when the production of these energies is sufficient to cover the entire planned consumption, the price remains at zero euros. And that’s what happened in those sixty hours this year.
The combination of moments of reduced demand and the increasing weight of renewable energies in the electricity generation mix in Spain is causing these events to reoccur more frequently. Zero-price hours are concentrated on weekends and holidays due to lower electricity consumption.
However, the hours when prices decrease also vary depending on the season: In winter, wind energy as well as energy causes the price to decrease, and at night it causes the price to decrease. In summer there is less wind and more photovoltaic and solar energy has an impact on the price, so it falls on central time. In fact, while the 13 hours of zero price recorded last January were mostly concentrated in the early morning hours, since April they have occurred only in the central hours of the day, the hours with the highest solar radiation.
The electricity industry warns that zero-price operating hours are a problem (because cannibalism problem and may discourage some investments in new renewable energy sources if the market frequently sets break-down prices) and is also an alarm signal about some shortcomings in the system (if there is sufficient storage capacity – batteries – or if more interconnections with the rest of Europe are available situation may occur). save or offload some of the production by producing less at certain times of the day and thus avoid sudden price fluctuations).