Record solar output pushes average German peak price below baseload

Renewables International

In April, power prices on the EEX electricity exchange continued to drop. Both baseload and peak prices fell below three cents, partly because last month was also a near record for solar power production.

Thanks to relatively good weather, power production from PV grew by more than 50 percent in April relative to March. The all-time record level was 5.1 TWh in July 2013, followed by 4.8 TWh in June 2014. Last month, 4.4 TWh was generated, putting April 2015 in third place historically.

In addition, a new record peak for PV production was posted between the 1 PM and 2 PM on April 21, when the old record of 24.2 GW from 6 June 2014 was topped considerably, with the new peak now at 25.8 GW.

The effect on prices was also noticeable. Because solar power is mainly generated around noon time, demand for peak power is offset at that time (there is a second remaining peak in the evening, which PV will never be able to offset directly). For the first time ever, baseload power was more expensive than peak power on average last month and day ahead trading at 2.97 cents per kilowatt-hour (baseload), compared to 2.94 cents (peak load).

Year over year, peak prices are down by 10.9 percent in Germany, which continues to have lower prices than neighboring countries on spot markets. Nonetheless, the other countries also posted falling prices last month, with baseload in France costing 3.95 cents, compared to 3.83 cents in Switzerland. Prices in those countries are otherwise relatively stable, however. The European average (ELIX) was 3.164 for baseload.

The news is potentially good for consumers, as the falling prices will eventual reach them. The prices are not, however, good news for power producers themselves, who increasingly struggle to break even. But a respite may be in sight: the nuclear phaseout will remove a huge chunk of baseload capacity by 2022, and the German government is also clamping down on coal power production, which may lead to the removal of numerous older coal plants.

Source: Renewables International. Reproduced with permission.