Deeply negative prices return to rock German power market

Laura Raus


Extremely negative prices seen on the German wholesale electricity market over the weekend could occur again as growing renewables capacity requires unprecedented flexibility from market participants if they are to be avoided, traders said on Monday.

On the EPEX SPOT exchange, the German Sunday baseload price was negative -€12.89/MWh. For the 14:00-15:00 Berlin-time slot, it was negative -€130.09/MWh – the lowest hourly day-ahead price in two years.

Such low prices took market participants by surprise. Many had not expected the deeply negative prices that occurred on the German market a few years ago to return because the market has slowly but surely adapted to wind and solar power volatility (see EDEM 17 February 2016).

The Sunday baseload product traded at €5.00/MWh on the over-the-counter market on Friday afternoon. And traders found the subsequent price drop on the exchange difficult to explain.

“Too little is known about the merit order between prices of -€10/MWh and -€500/MWh,” an intra-day trader at a German regional utility said. “So no forecast can predict these very low prices.”

Even when the market is set to be very oversupplied, EPEX SPOT day-ahead hourly prices usually plateau at -€50/MWh to -€80/MWh as a lot of generation is taken offline around that level, which prevents further price declines, ICIS analyst Sebastian Stuetz said.

But over the weekend, this plateau was aggressively tipped for the first time in two years.

Residual demand

ICIS analyst forecasts indicate Germany’s residual demand – power demand that cannot be met by renewables with zero running costs – reached record lows for some hours of Sunday. It was just 13.6GW at 14:00 when high wind and solar power coincided.

This required unprecedented flexibility from market participants to avoid extremely negative prices – flexibility that apparently did not materialise.

According to an analyst at a European energy trading company, because Thursday was a public holiday in Germany and many people took Friday off as well, power plant owners would have scheduled production for the weekend on Wednesday and could not adjust properly on Friday when forecasts indicated higher winds than previously expected.

Intra-day market

The lowest EPEX SPOT average 15-minute intra-day auction result for each hour of Sunday was above the minimum hourly day-ahead price for that day, reflecting price disparity between the very bearish day-ahead market and the intra-day platform, which was still remarkably weak but less so.

After exchange results revealed extremely negative day-ahead prices for Sunday, some plant operators took a part of their capacity off the market which lent some support to intra-day prices.

“We have a very big wind portfolio and we could shut down a big part of it,” the intra-day trader said.

His company bought power on the intra-day market instead to completely fulfil its supply obligations. And, considering that prices went to very negative levels on the intra-day platform as well, it meant the company could earn more from its power purchases than it would have earned from subsidies had its turbines been generating.

An intra-day trader at a solar power company said it had reacted in a similar way.

“There are not that many counterparties in Germany who can do this,” he added. “Not many who have both the opportunity and the knowledge.”

After the past weekend, many renewable energy direct marketers will probably take generation offline when very negative prices occur, which can add flexibility to the market, he said.


Deeply negative prices could nevertheless occur again if high wind and solar power coincide with low demand, the trader said.

And, fundamentally, the supply-demand outlook is quite similar for the coming weekend as it was for the past one, latest data seen on Monday indicated. “We have to prepare ourselves for such situations … We are entering a new level of residual demand for Sundays,” ICIS analyst Stuetz said.

But prices are not likely to be as extremely negative for the next weekend because companies will probably make more effort to avoid them, he said.

It is hard to say if such extremely negative prices will occur again, but conventional power plant owners will perhaps make more efforts on a Friday to be able to shut their generation off if necessary at the weekend, the first trader said.

“We will not see that [extremely negative prices] next weekend… people are alert now,” a trader at a European energy company said. “It will probably be some time before we see them again.”


Global News + ICIS Chemical Business (ICB)

See the full picture, with unlimited access to ICIS chemicals news across all markets and regions, plus ICB, the industry-leading magazine for the chemicals industry.

Contact us

Partnering with ICIS unlocks a vision of a future you can trust and achieve. We leverage our unrivalled network of industry experts to deliver a comprehensive market view based on independent and reliable data, insight and analytics.

Contact us to learn how we can support you as you transact today and plan for tomorrow.