Low demand combined with sunny conditions and meltwater lifts hydro and solar production
Over the last week, several European countries had power prices in the wholesale energy market dip into negative values during daylight hours. The decline in prices was mostly driven by the abundance of available energy generated by renewable sources, combined with the relatively low demand for energy for heating or cooling, caused by normal springtime temperatures.
Negative prices often occur when there is an excess supply of electricity in the market. This can happen when renewable energy sources such as wind, solar, or hydro produce a large quantity of electricity which exceeds demand and cannot be stored for later use. In such cases, producers may offer negative prices to incentivise wholesale consumers to take the surplus electricity off the grid and avoid overloading the system. This situation occurred due to an area of high pressure dominating across much of central and north-west Europe, providing lots of solar power generation across the area. Meanwhile, Finland experienced an oversupply of hydroelectric power resulting from excessive springtime meltwater which in turn led to negative prices here as well.
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