What Are Negative Electricity Prices?

Negative electricity prices occur when the supply of electricity on the market exceeds demand, resulting in a situation where producers pay consumers to use electricity. This phenomenon arises from an energy surplus on the market, particularly from renewable sources. It is most common during summer months when renewable energy production is at its peak. However, with the continuously increasing capacity of renewable energy sources, negative prices are now more frequently observed during spring and autumn as well.

According to data from the Short-Term Electricity Market Organizer (OKTE), there were 91 hours of negative electricity prices on the daily market in 2023. This year, the number has already exceeded 288 hours, representing a threefold increase. The trend is driven by a significant rise in the installed capacity of photovoltaic power plants.

Over the past three years, approximately 400 MW of photovoltaic capacity has been added to the grid, according to the Slovak Electricity Transmission System (SEPS). This brings the total installed photovoltaic capacity to 930 MW as of July 1, 2024.

Insufficient energy planning

The reason is a complex mix of factors, but the key issue remains insufficient energy planning. While the development of renewable energy sources has been actively supported, the need to simultaneously increase storage capacities has long been overlooked. This has led to a situation where energy surpluses couldn't be effectively utilized.

The energy crisis of 2022 further sped up the issue, as insufficient demand during surpluses caused an increase in the occurrence of negative prices. Although countries with high renewable electricity production are expanding international connectivity capacities, energy storage in smart battery systems remains essential for stabilizing the power grid.

Impact of Negative Prices on Suppliers and Photovoltaic Owners

When installing photovoltaic systems, many companies expect income from selling surplus electricity, which leads them to install systems with a higher capacity than they actually need. In practice, however, these expectations may not always be met.

Primarily at risk are companies with large photovoltaic systems that lack the sufficient capacity to efficiently use or store surplus energy, which could lead to financial losses if they are forced to sell surplus energy at negative prices.

In the Netherlands for example, discussions are already taking place on introducing fees for surplus energy and in the Czech Republic, changes are being considered that could penalize solar energy producers. The significant increase in hours with negative prices has a disadvantageous impact on businesses, which may face severe economic pressure instead of profit from selling their surplus energy.

It is expected that negative prices will occur in the future more frequently and with greater intensity. The lowest recorded price on the Slovak market reached -146 euros per megawatt-hour, but in the future, it may frequently reach -160 euros.

Companies with oversized photovoltaic systems could lose hundreds of thousands of euros due to negative electricity prices, emphasizing the need for effective solutions to manage this situation.

Solutions to minimize Negative Electricity Prices

One potential solution to the issue of negative electricity prices on the day-ahead market is strengthening transmission capacities. However, this is a very costly approach and would only be effective for exporting electricity to countries with a low share of renewables in their energy mix.

In practice, only two solutions exist for this problem: reducing photovoltaic capacity or increasing self-consumption with the help of smart battery storage systems.

• Reducing Photovoltaic Output: A photovoltaic output reduction device, or a photovoltaic power regulator, helps optimize energy production when it cannot be fully used, stored or fed into the grid. However, this is expensive, especially for larger installations or when integration into an existing system is required. Capacity reduction is considered a short-term or emergency measure, as it reduces overall energy production. For long-term efficiency, investing in smart battery storage and improving self-consumption is more advantageous.

• Increasing Self-Consumption Using Smart Battery Storage: Smart battery storage systems, such as our brAIn by FUERGY solution, allow for on-site consumption of generated electricity, minimizing the need to sell surplus energy at negative prices. To ensure effective self-consumption, it is essential to design and install green technologies with appropriate capacity and performance. Oversized systems are unnecessarily expensive and often underutilized, leading to surplus energy issues in the case of photovoltaics. Conversely, undersized systems result in lost profits as they fail to capitalize on the full potential of the delivery point. An optimally configured system can achieve energy self-sufficiency, significantly reduce CO₂e emissions and enhance a company's ESG profile.

Unlike standard storage systems, smart storage systems not only store energy but also provide stabilization services for the grid, known as non-certified ancillary services, offering additional financial benefits.

Companies lacking available capital for a smart battery storage investment can take advantage of the Energy-as-a-Service model. In this model, the energy supplier finances the battery storage system, which not only saves costs but also generates significant profit.

To achieve maximum energy efficiency and a quick return on investment, it is crucial to integrate intelligent control systems like EMS (Energy Management Systems), which ensure efficient consumption management and maximize benefits.

Combining photovoltaics with smart battery storage and an intelligent EMS system together delivers the fastest return on investment (see graphic).

EMS systems predict network conditions, respond proactively to impending negative prices and free up battery capacity to store surpluses, earning financial rewards from market organizers. This approach enables the energy storage system to support the grid by providing flexibility, facilitating a more efficient use of generated electricity and adapting dynamically to consumption needs.

Solutions for a Modern Energy World

The phenomenon of negative electricity prices is a reality that demands fast and effective solutions. FUERGY believes in efficient energy management through smart battery storage systems that adapt to grid needs and minimize financial losses for photovoltaic owners. Our solutions help achieve higher energy independence, grid stability and improved sustainability for the future.

Do you want to be part of the energy revolution? Contact us to learn how we can empower your business and protect it from the negative impacts of electricity prices.

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