In the last period i electricity prices in Europe they are in notable declineso much so that in many countries (among which Italy is not yet included) the time slots in which there are negative prices.
No error: there are actually time slots in which the price of energy is accompanied by a “minus” sign, highlighting a situation of imbalance which could have an impact negatively on government policies for the environment.
The fact that there are moments of the day in which the price is negative, in fact, means that the renewable energy plants present in the area produce more energy compared to the one that is consumed. Which in itself is not a problem, although it could be a problem brake to the development of renewable energy.
What are negative energy prices
Having negative energy prices in the wholesale market is an increasingly frequent phenomenon which has been under consideration for some time to identify a solution. On the other hand, having time slots with negative tariffs represents a real problem paradox for the energy market.
But concretely, what does the “minus” sign mean and when does it occur? This phenomenon has become increasingly frequent with development of renewable energyencouraged by national governments with the aim of reducing the demand for fossil fuels and having a more sustainable impact on the environment.
However, the increase in production of wind and solar energya large part of which is fed into the system, has meant that at certain times of the day (particularly during daylight hours given the strong impact of photovoltaic systems) the quantity of “green” energy exceeds consumption. In this case what happens is that those who produce energy have the advantage of paying consumers encouraging them to consume more electricitya solution which, although it may seem paradoxical, is nevertheless less expensive than stopping the plant.
A situation that has occurred more and more frequently in recent times, especially in countries like DenmarkL’Holland and the Germanybut which he also began to touch Spain And Portugal. A phenomenon that has not yet occurred in Italy, although it could be imminent: this is demonstrated by the fact that last April 7th the threshold of 10 cents per megawatt hour in some time slots, lowest price in the last 4 years.
To understand why, just look at this data: in the first week of April in our country there was an increase in energy produced by photovoltaic systems equal to 76% compared to the previous week, so much so that on April 6th production reached the highest value in our history, equal to 119 gigawatt hours.
Because negative prices are a problem
According to analysts, although low electricity prices may represent an advantage for consumers today, in the long term they could become a obstacle to the green transition.
While it may seem good to have cheap electricity for a large part of the day, it is not a sign of the health of the energy market. An imbalance that could in the long run to brake the development of renewables. A sudden stop that risks having a negative impact in the future, when consumption could increase while green energy production would remain at the current level. A situation that in fact would go to disadvantage of the consumers themselveswho risk once again facing high electricity prices.
Which is why negative prices are a topic that has been given a lot of thought in recent times. So much so that with the support of European funding the project “AADAMS” (“Auction and day-ahead markets spikes”) with which it was discovered that negative prices induce non-normal trends and, above all, time-varying probability distributions.
By examining the German market, the project highlighted the fact that the high presence of negative prices is indicative of the lack of investment in flexible electricity generation and especially, lack of market coupling. On the other hand, with better distribution the greater energy production could have been used to satisfy demand and reduce prices in Neighboring countries where instead there is a lower incidence of renewables.
