I don't really understand the negative price phenomenon. Is it producers who must pay the negative price? If so, why not simply disconnect the generation? It would seem to be more economical than paying to generate.
Or is it transmission system operators who pay the negative prices? If so, why can't they disconnect excess supply, rather than pay someone else to absorb unneeded supply? Are there legal requirements that all renewable electricity must be used and paid for? This seems like a foolish requirement.
The excessive negative prices are a symptom of a broken electricity market design. Renewables in Germany are paid fixed prices for their produced electricity, guaranteed by the government. If the electricity can't be handled by the grid, they are compensated anyway.
This system incentivizes several kinds of bad behaviour, such as
1) Renewables overproducing, forcing everyone else to deal with the consequences instead of curtailing the the sources which can do this the easiest and are responsible for the problem.
2) Not caring about installing renewable generation capacity that is producing as uncorrelated as possible to the rest of the renewables.
3) Installing new renewables generation even if the grid hasn't been expanded enough yet to handle the random load peaks of renewables.
All in all, a very questionable market design once renewables penetration rises. And one that is going to cost the state a lot of money (already 10-20 Billions a year in Germany). And yet the SocDems and Greens complain about not having enough money for further subsidy programs to make expensive renewables technologies competitive. Of which we will need a lot to incentivize the overbuild and the expensive hydrogen backup required because nuclear is considered sinful for almost religious reasons.
I don't really understand the negative price phenomenon. Is it producers who must pay the negative price? If so, why not simply disconnect the generation? It would seem to be more economical than paying to generate.
Or is it transmission system operators who pay the negative prices? If so, why can't they disconnect excess supply, rather than pay someone else to absorb unneeded supply? Are there legal requirements that all renewable electricity must be used and paid for? This seems like a foolish requirement.
The excessive negative prices are a symptom of a broken electricity market design. Renewables in Germany are paid fixed prices for their produced electricity, guaranteed by the government. If the electricity can't be handled by the grid, they are compensated anyway.
This system incentivizes several kinds of bad behaviour, such as
1) Renewables overproducing, forcing everyone else to deal with the consequences instead of curtailing the the sources which can do this the easiest and are responsible for the problem.
2) Not caring about installing renewable generation capacity that is producing as uncorrelated as possible to the rest of the renewables.
3) Installing new renewables generation even if the grid hasn't been expanded enough yet to handle the random load peaks of renewables.
All in all, a very questionable market design once renewables penetration rises. And one that is going to cost the state a lot of money (already 10-20 Billions a year in Germany). And yet the SocDems and Greens complain about not having enough money for further subsidy programs to make expensive renewables technologies competitive. Of which we will need a lot to incentivize the overbuild and the expensive hydrogen backup required because nuclear is considered sinful for almost religious reasons.