Sub-Zero Power Prices to Become Normal Amid Renewables Boom, Experts Say
Lu Ruyi
DATE:  May 29 2024
/ SOURCE:  Yicai
Sub-Zero Power Prices to Become Normal Amid Renewables Boom, Experts Say Sub-Zero Power Prices to Become Normal Amid Renewables Boom, Experts Say

(Yicai) May 29 -- The increasing output of renewable energy will make it normal for power prices to fall below zero, according to Chinese experts.

As countries install more wind and solar power stations, electricity prices could dive below zero more often due to an imbalance in supply and demand, industry insiders said to Yicai.

Negative prices are made possible by a trading system that hinges on the power grid's need to stabilize supply and demand while an enlarging group of providers of solar and wind energy cannot store excess power on sunny or windy days.

In Germany, power prices dropped below zero for 50 hours last month, reaching as low as minus EUR0.05 (US 5 cents) per kilowatt-hour due to a peak supply of solar energy.

In China, suppliers had to pay clients to use energy last time a year ago and the price was minus CNY85 (USD12) per kWh. Another time was in December 2019 when electricity was priced minus CNY40 per kWh in Shandong province.

Haitong Securities said that the sub-zero power prices in Shandong were mostly caused by suspended production at local plants during holidays so the grid's load dropped by 15 percent while solar power generation surged due to sunny weather.

In March last year, the provincial development and reform commission of the eastern province put forward a draft to set the floor of spot prices of electricity below zero, becoming the first Chinese province to do so.

Producers' costs rise if they stop generating energy so some firms are more willing to pay buyers to digest their excess supply, said Zhou Xing, a senior industry analyst on Qianzhan's platform called the Economist.

Sub-zero prices are a result of the gradual popularization of renewable energy and they will become a norm in the future, said Lin Boqiang, head of Xiamen University's energy policy institute.

Editors: Liao Shumin, Emmi Laine

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Keywords:   Renewable Energy,Electricity Price,China,Germany,solar power,wind power,spot price,electricity,energy trading,sub-zero power prices