Power price spikes show need for flexible capacity: Eurelectric
2024 was year with lowest emissions in EU power sector thanks to rising share of renewables while electricity prices fell on average
More flexible power generating capacity is needed to smooth out the variability of renewables and avoid price spikes such as those that occurred during Germany’s latest ‘Dunkelflaute’ (‘dark lull’), lobbying group Eurelectric said, while pointing to generally falling prices last year.
On average, EU wholesale day-ahead market prices fell by 16% to €82 per megawatt hour in 2024, from an average of €97/MWh in 2023, the industry group said, adding that negative prices – usually caused by excess wind and solar output – broke another record, occurring 1,480 times during last year.
This average was even lower, at €76/MWh, up until the last quarter of the year when a surge in gas prices, high winter demand, and scarce solar and windless days pushed prices up, causing several spikes in markets such as Germany, Hungary, Romania and Sweden.
“Eurelectric’s data proves once again that investing in higher renewable generation is the right path for a more competitive and decarbonised economy, but it must be complemented by more firm and flexible capacity to balance their variability, limit reliance on costly fossil fuels and contain price spikes,” Eurelectric policy director Cillian O’Donoghue said.
The event is being investigated by Germany’s federal grids agency (BNetzA) and anti-trust authorities amid the suspicion that power firms may have withheld available fossil backup generation capacities (gas and coal) in order to artificially push up prices and cash in.
On the flip side, negative power prices (which trigger cheap power in Scandinavia as well, a fact ignored by the same politicians), can be a problem for producers and public finances in countries like Germany, where renewable power producers often are remunerated for their generation independent of the level of wholesale electricity prices.
Negative prices broke a new record last year as they were registered 17% of the time in at least one bidding zone, Eurelectric said.
On a more positive note, renewables in 2024 contributed 48% of the EU power generation mix, followed by nuclear at 24% and fossils at 28%, which was their lowest share ever, contributing to a 13%-drop in emissions compared to 2023.
“Electrification remains the low-hanging fruit to decarbonise the EU. The more you electrify your energy applications the easier you decarbonise, but demand for electricity is not where it should be today,” added O’Donoghue.
Boosting industrial electrification must be a priority for the new European Commission, Eurelectric demanded.
The Clean Industrial Deal is the ideal opportunity to provide new incentives to electrify such as creating an electrification bank, electrification accelerated areas and de-risking mechanisms for long-term power purchase agreements, the group added.
(Copyright)