Power Prices Plunge Across Europe in Stormy Weekend Weather
European power prices for Saturday plummeted with rates in Germany turning negative for some hours as powerful storms are forecast to spur record wind generation, helping to ease the strain of soaring energy costs.
Day-ahead power in Germany, Europe’s biggest market, plunged 66% to its lowest level this year with some hourly prices even dropping below zero in an auction on Epex Spot SE. Output from Germany’s wind and solar parks will surge about 8% above the demand for power at noon on Saturday, according to a forecast by Bloomberg.
“After a period of calmer weather, periods of windy weather are more likely again,” national forecaster Deutscher Wetterdienst said in its latest forecast.
The cost of electricity has dropped from records in December, but Europe’s many millions of homes and factories are still facing record bills for this winter. The absence of any real cold spells this year also helped depress prices.
When supply of power, typically weather dependent wind and solar generation, rises above demand during individual hours or days, market prices can drop below zero. This mean producers will have to pay to to distribute their output and customers with hourly contracts will be paid to consume.
The jump in wind power generation will also give some welcome relief to the climate after Europe’s coal and gas plants were heavily relied upon during the worst of the region’s power crunch.
The German day-ahead price fell to 39.62 euros a megawatt hour, the lowest since Dec. 30. Hourly prices turned negative between 11 a.m. and 3 p.m., dropping as low as -0.52 euros. Day-ahead prices also fell in the U.K., Nordic, French, Spanish and Italian markets, with prices of zero appearing for some hours in west Denmark and the Netherlands.
German wind output forecast:
Source: Bloomberg
