Solar Generation Surge Sends European Power Prices Below Zero

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(Bloomberg) — A patch of clear, sunny weather boosted solar generation across parts of Europe and sent power prices into negative territory for large periods around midday.

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Intraday power prices in Germany were below zero for four hours between 11:00 a.m. and 3 p.m. according to data from Epex Spot SE. Prices in France, the Netherlands and Poland were also negative for a similar amount of time.

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Negative or below-zero prices have ticked up so far in March, compared to the same period last year, as more solar power floods the grid, outstripping demand. While cheap power is good news for households and industries, it poses a problem for some renewable generators who cannot earn a profit during peak generation. 

That is impacting not just the bottom line of renewable energy companies but also power purchase agreements being made in the region “as sellers typically forgo any compensation at times of negative pricing,” Pietro Radoia, senior solar analyst at BloombergNEF wrote in a note last month. “Lenders are pushing sponsors to negotiate PPAs so that negative price risk is shared between project owners and PPA offtakers.”

With Europe’s grid infrastructure not equipped to absorb the additional output, more periods of negative prices could follow during the peak solar generation periods in June and July.

The region has seen a surge of new solar power in recent years as soaring natural gas prices and declining panel costs combined to juice demand for the renewable power source. Germany is set to add a record 17 gigawatts of new solar power capacity this year and continue to break that record every year until at least 2030, according to data from BloombergNEF.

Peak solar output in Germany reached nearly 44 gigawatts on Wednesday, according to Bloomberg models, close to the highest level this year. In France, solar generation surged on Tuesday to 16.6 gigawatts, according to data from grid operator RTE. 

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