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Power prices in France turned negative for hours on Tuesday morning amid tepid demand in a struggling economy and increased renewables generation.
French intraday power prices traded at as low as -$22.25 (-20 euros) per megawatt-hour (MWh) on the Epex Spot exchange, according to data compiled by Bloomberg.
So far this year, France’s power demand has been undershooting projections by grid operator RTE as the French and European economies are seeing little – if any – growth.
France, which derives about 70% of its electricity from nuclear energy, returned last year to the top spot of Europe’s net power exporters, as its nuclear fleet returned from maintenance and domestic demand was lower. Even with high levels of electricity exports, power supply in France is set to exceed demand for several hours on Tuesday.
European wholesale electricity markets have seen zero or negative power prices for the most hours on record this year amid soaring renewable energy generation and a mismatch between supply and demand hours for solar power.
Negative pricing occurs when there is more electricity supply than demand, a scenario becoming more frequent as Europe continues its aggressive push toward renewable energy.
The number of tradable hours in which power prices were zero or negative have jumped so far this year in major wholesale power markets, including Germany, France, the Netherlands, Spain, Finland, and southern Sweden, per LSEG data cited by Reuters.
Zero or negative wholesale power prices have started to slow investment in capacity additions and make the case for the need for higher investment in energy storage, through which power producers would avoid curtailing electricity output or having to pay to offload electricity.
The rapid expansion of wind and solar capacity is reshaping the continent’s energy landscape. On days when both sources are generating at high levels, the market can become saturated with inexpensive power, driving prices down to the point where they even turn negative. While this benefits consumers in the short term, it also highlights the challenges of managing an energy grid increasingly reliant on intermittent renewable sources.
