Secrets of Europe (Germany) electricity market “negative Valence”

Polaris solar PV net news: power plants generating electricity sellers for income, consumers need to pay electricity bills, seems to be the done thing, but Europe is increasingly an opposite phenomenon occurs, the “negative Valence” (negativeprice). Negative Valence refers to renewable energy in the electricity market after a sharp increase, electricity market oversupply, the market-clearing price is negative. Negative price means power companies issued a kilowatt-hour payment to purchase, purchase electricity not only do not need to pay for the electricity, but draws money from the power plant.

Under normal market conditions, power generation enterprise bidding, prices supply and demand curves intersect is the settlement price (clearingprice), also known as wholesale electricity prices in the market (WholesalePrice). Basic rules for bidding for electric power market is carried out in accordance with marginal cost of different types of power generation precedence ordering (MeritOrder), in accordance with marginal cost when bidding (marginalcost) ordered from the lowest to highest. Marginal cost refers to the cost per kilowatt-hour (equivalent to operating costs).

Power plant electricity quote for each hour, first hit with lower marginal costs, marginal cost is slightly higher in the second place, and so on. When hit power and demand is the same, one last bid successful power bid is settled, all the winning power at this price for a settlement.

Here to explain the marginal costs of various types of power supply. As mentioned above, the power of marginal cost is the cost of fuel. Renewable fuel cost is zero, its marginal cost is close to zero, is therefore a top priority bidding for power. Marginal cost of additional power from low to high in order for nuclear power, coal and gas power, which is all kinds of power supply bidding order.

Renewable energy after participation in the market, pulling down markets wholesale electricity prices sharply. When not renewable energy in the electricity market, first hit is nuclear power, followed by coal and gas power. As shown in the left side of Figure 1, nuclear power, coal and gas power and be able to meet electricity demand, little red dot is the supply and demand curve intersections, the point is made that the market clearing price. Dang can renewable energy entered power market zhihou (as Figure 1 right by shows), due to can renewable energy power marginal cost minimum (close zero), first bidding success, then again arrangements nuclear power, and coal electric on can meet power needs, such on no longer needs marginal cost more high of power (gas electric), at power market supply curve right moved, and settlement price Xia moved, led to settlement price fell.

If renewable energy can meet or exceed the load, there is zero or negative charge of electricity price in the market price of electricity. As mentioned above, when renewable energy into the market after wholesale power prices will drop. One special case is, when renewable electricity generation itself when the electrical load is met, wholesale electricity prices are zero. More extreme cases, when renewable energy generating capacity exceeds the load demand, in a State of oversupply in the market, markets wholesale electricity prices fell below zero at this time, which appeared to the so-called negative cost. Appear negative prices most of the time it is in a sunny or windy low-load periods and holidays, such as Christmas Eve.

Introduction of negative price trend is the development of the electricity market in Europe. For a long time, in order to prevent extreme damage to the electricity market rules, protection of generator and user benefits, several European power market for wholesale electricity prices are high and low limits, does not allow for zero and negative prices. But in recent years, with the rapid development of renewable energy, if not negative, all types of power, including renewable energy, for economic interests so as to generate electricity, exacerbating the situation of oversupply of electricity markets, and do not allow negative price disadvantages become more and more obvious. Up to now, within the European Union, allowed negative prices in the electricity market rules, including joining the European electricity exchange (EPEX) in four countries (France, and Germany, and Austria, and Switzerland), as well as Belgium and the Netherlands, and other electricity market does not allow wholesale electricity prices fell to below zero.

In 2007, Germany was first introduced to the market on the day that the negative price; in 2008, Germany/Austria before market introduction of negative price in 2010, France ahead and intraday market introduction of negative price; in 2012, 2013 Austria and Switzerland intraday market has introduced a negative price. According to statistics, the 2012 Germany appear negative price total time of 56 hours, 2013 for 48 hours. France, and Belgium 2012 negative price is lower than the number of hours in other markets, such as Germany, but in the year 2013 increased significantly.

“Negative Valence” conventional power supply with conventional power–suffered serious economic losses. In conventional power supply, in addition to gas-fired units have flexible start and stop the outer, coal power, nuclear power, and so are not suitable for frequent start-stop or quick upper and lower regulated output, not only technically difficult to achieve, and the cost is very high. When at one time renewable energy output is very large, enough to meet or exceed the load, causing electricity wholesale market price is zero or a negative price, coal and other conventional power supply on the system in order to avoid the huge economic losses caused by starting and stopping, rather than according to negative price bidding in the electricity market, a “paying” way to gain rights continue to generate electricity. The so-called “right to choose the lesser of two evils”, as long as the negative pricing costs than starting and stopping low, conventional power has no choice. Germany negative electricity market price, lignite power plant output power ratings of at least 42%, nuclear power output power ratings of at least 49%, only gas-fired power plants can reduce output power ratings of between 10%.

“Negative Valence”-the promotion of renewable energies and renewable more responsive to market supply and demand situation, slowing fixed feed-in tariff mechanism of renewable electricity market distortions. Germany previously fixed feed-in tariff policy for renewable energy (Feed-inTariff), requires grid companies to accept unconditionally all renewable electricity and at a fixed price to pay Internet access tariffs and transmission company selling renewable electricity on the electricity market. In this way, renewable energies can be described as “hanlaobaoshou”, just power, regardless of sales (produceandforget), even though the oversupply of electricity market when there is a negative price, they also continue to happily let the fan continue to rotate power.

On August 1, 2014 release Germany the new edition of the renewable energy law (also known as version 2.0 of the renewable energy Act), major policy adjustment, require that all medium and large renewable energy projects to direct sales model (directselling), which is involved in the bidding, State subsidies of electricity price given on the basis of the market. Dang power market appeared negative price Shi, can renewable energy power commercial will good weigh about pros and cons has: If can got of electric price subsidies with actual cost Zhijian of poor value than negative price absolute to big, description continues to power still is profitable of, apparently power Chamber of Commerce select continues to power Internet; instead, if electric price subsidies with actual cost Zhijian of poor value insufficient to cover negative price, so continues to power will pay out, such power commercial on will active stop power, Thus slowed down the electricity market oversupply situation.

“Negative Valence” with consumers–users do not enjoy the benefits of falling wholesale electricity market prices. When electricity wholesale market price is very low, zero or even negative price, theoretically, transmission of results should be consumer electricity prices should drop, users should enjoy the benefits of that, but the reality is more complicated. In Germany, users are generally signed with electrical contractor for sale sell service agreements, the agreement period is usually one year, giving the user of electricity price in the agreement within the time limit was fixed.

Electricity sales business on behalf of the user to participate in the buying and selling of electricity on the market in wholesale electricity prices based on the price of electricity transmission and distribution, various taxes and fees (including renewable electricity price levy), and taking into account reasonable income from electricity sales, identified to the user electricity price. Electrical contractor for sale as direct participation in market transactions, so that its real-time price and market linkage, but does not occur with user electricity price linkage. So Ah, sale electric commercial also to bear is big of operating risk, if this a years power market wholesale electric price very low, and to user of agreement price set high has, so Xia a years user on will abandoned original of sale electric commercial, steering price more low of other sale electric commercial; instead, if this a years power wholesale market electric price very high, and to user of agreement price set low has, such sale electric commercial will bear loss.

Original title: Secrets of Europe (Germany) electricity market “negative Valence”

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