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Lack of flexibility results in negative prices in high wind period

GERMANY: Windy weather across Germany in the last days of March 2015, and lack of flexibility in the electricity generation and consumption markets resulted in negative spot market prices in five individual early morning hours on 30 March 2015.

The lowest price was €20.07/MWh for 2am-3am, according to energy exchange EPEX Spot data. Wind generation amounted to 18-20GW over the period, according to Agora Energiewende data.

The average base price (known as phelix base) on 30 March 2015 was €16.05/MWh. The average peak price (known as phelix peak) that day was €21.19/MWh.

Otherwise, wholesale market prices have been low, but remained positive as traders used market flexibility to adjust to the high volume of wind generation. This reached a maximum of 22GW at around 5pm that day.

Negative prices increase the incentive for power station operators and consumers to make their plants more flexible and, in principle, provide a useful market signal, according to consultants Energy Brainpool in a 2014 analysis.

Costs are added to the renewable energy levy however, since this covers the difference between the cost of wind energy generation and the wholesale market electricity price.

To reduce such potential additional costs, the German renewable energy act 2014 specifies that from 2016, after six hours of negative prices, the renewable energy levy is not paid for output from new wind turbines with a capacity of at least 3MW until prices become positive again.

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