March 28, 2012

The Afternoon Dip

By: Craig Morris

Source: Renewables International

Last week, German photovoltaics magazine Photon pointed out in a newsletter what an impact of photovoltaics was having on spot market prices in that sunny week. Since our colleagues at Photon only did so in German, however, we thought we would do them (and you, dear reader) the favor of posting their findings in English here.

As this website shows, power prices peaked last Wednesday at around 65 euros per megawatt-hour just after 9 AM. German power consumption peaks twice a day, roughly between 12 noon and 1 PM and then later in the evening at around 8 PM. The spike in the evening is just barely visible, with prices rising from around 38 euros at 5 PM to 55 euros per megawatt-hour at around 7 PM. But the peak just after noon time is no longer visible at all. By that point, the price of power has dropped even below the price at four in the morning.

The price curve four years ago (on March 12, 2008) for a comparison. Source: Epex A comparison of the prices four years ago with those of today shows more clearly how vastly things have changed. Back then, prices were the lowest at four in the morning, dropping just below 20 euros per megawatt-hour. The two peaks are not clearly visible here either, however, with the price reaching the upper 50s at 8 AM and staying at near that level until 9 PM at night. In other words, there is no dip between the spike in morning demand and the spike in evening demand. But there is a big dip then these days.

At the end of 2011, Germany had some 25 gigawatts of PV installed, and it may have installed as much as two more gigawatts already this year, though no official figures will be available for a few months. Compare that, however, to the installed PV capacity for the chart from 2008 above, when Germany had closer to five gigawatts installed.

But there is one further salient feature in the comparison of the chart from 2012 with the one from 2008. Last week, the spot price did not dip below 35 euros per megawatt-hour, whereas prices started at 20 euros – nearly half as expensive – four years ago. Over a 24-hour period, the price of power on the spot market is indeed lower today than it was back then, but how do we explain the nearly doubling of power in the middle of the night? Given that baseload demand has hardly changed, it must be assumed that power companies are charging more in times of lower demand now that they cannot make their old profits during daylight hours.