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Europe’s bouts of free electricity spark investor concern: Electricity prices have been dropping into the negative as May’s high productivity from solar parks in Spain and wind turbines in Norway caused supply to exceed demand, Bloomberg reported. Burdened with excess energy, producers gave consumers electricity for free, raising worries amongst investors regarding the profitability of the USD 800 bn renewables market. The phenomenon is not unheard of, but instances increased 12-fold last year.
How can the market adapt? Building more battery storage facilities would allow excess electricity to be preserved for when it is needed and mitigate intermittency such as when the sun isn’t shining. Producers of traditional energy sources can also make room for renewables on the grid by reducing or halting their output, an option taken by Electricite de France, RWE, and Vattenfall. Companies like Vattenfall are turning to flexible investments such as developing batteries alongside wind and solar parks. The rise of sub zero pricing isn’t expected to die down until the mid 2030s, when there are enough energy storage systems in place to deal with the excess, says Modo Energy director Ed Porter.
It’s not just Europe: Australia has dealt with its own periods of negative electricity pricing, with the National Electricity Market falling below zero for 14% of last year. That percentage is expected to rise as more renewables are added to the grid and rooftop solar gains popularity. California experienced 592 hours of below zero electricity this year, already overtaking last year’s total.
Consumers are tapping into the benefits: Some consumers have begun adjusting their energy consumption to periods with lower prices. An app called Tibber, which currently has around 1 mn users, tracks the electricity market hourly.
