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Ample energy price fluctuations highlight the need for flexible technologies

30 April 2024

Electricity prices are experiencing large fluctuations in Europe, which highlights the need for more flexible assets on this market, reports Bloomberg.

On Sunday, in Germany, electricity prices on the market for the next day went down around 2 p.m. up to minus 65.06 euros for one Megawatt-hour. Instead, on Monday, prices rose at one point to a peak of 204.57 euros for a Megawatt-hour, the highest level since December. Similar extremes have been recorded across Europe, making the task of balancing the grid even more difficult for countries.

This kind of volatility will only increase as Europe ramps up its solar and wind capacity to meet strict climate targets. As intermittent sources take up an ever-increasing share of the energy mix, so will the need for gas-fired power plants that can be turned on and off quickly, as well as large battery systems that can store any surplus electricity. At the moment there are not enough such flexible assets, according to Agerpres.

“Germany’s growing need for flexibility is contributing to deepening day-ahead market volatility,” says Sabrina Kernbichler, analyst at Energy Aspects Ltd. According to her, high upfront costs for flexible gas-fired power plants are helping to push up short-term electricity prices.

At the same time, low weekend electricity demand in the spring and fall months, as well as high PV production combine to create more and more negative price situations. With spring and early summer being a peak period for PV technologies, analysts at BloombergNEF expect average monthly PV production to hit a new peak in May and again in June.

In the coming days, electricity demand for Wednesday is expected to be lower than usual for a normal working day, given that it is a public holiday in most European countries. Forecasts show that photovoltaic energy production could reach a peak of 40,695 Megawatts, close to the historical maximum of 40,919 Megawatts reached in May 2023.

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