Tue Jul 6th, 2010 at 07:27:48 AM EST
The emergence and maturing of renewables is often supported with feed-in laws (or feed-in tariffs, FITs), which guarantee the purchase of produced electricity, and that at a rate above the production price of conventional modes (feed-in rate, FIR). But does that mean that FITs increase electricity prices?
Not necessarily. The merit order effect has been brought up many times on ET: the actual market price of electricity is determined by supply and demand, and will reflect the price of the most expensive producer needed to cover demand. Thus fluctuating market prices can get well above FIRs, hence, when renewables are around, they will throttle peaks.
But on the night from 3 to 4 October 2009 in Germany, something even more extreme happened. Market prices turned negative! In a just released analysis, Germany's federal economy ministry (BMWi; which is headed by a minister from the neoliberal FDP), the blame is put on abundant wind power, and the minister called for mitigation measures.
The meaning of negative market prices (which happened a number of times, that night last October was only the record) is that producers would rather pay for the use of electricity they produce on standby than shut down and later re-start their power plants. In the argumentation of BMWi, this indirectly means extra costs for consumers.
In the summary, the correlation of high momentary wind power, low total consumption and negative spot market prices is suggested with a table of past negative spot market price events:
(The columns are: event No., day, date, hour of day, spot market price, electricity from wind, total load [annual average c. 65 GW], and 'residual load' [c. load minus FIT regime].)
Two negative peaks close by were picked as examples for deeper analysis:
The scale on the left is for spot market price, which is the red curve. The scale on the right is for momentary power; with wind shown in light blue, conventional production in black, and the total in blue.
Upon close inspection, you'll see that the deeper negative peak arose when the conventional power plants were powered up for the morning upswing in consumption and wind power began to fall -- the study argues that the operators had to make do with the limited speed of variability of reactors. They also compare the events during which the total power from baseload plants (which are the least flexible in power output) was the lowest, and note that while baseload power wasn't the lowest during the 9 October 2009 record event, the prior down-powering of both the nuclear and Braunkohle [terminology warning: low-grade bituminous or high-grade sub-bituminous coal; often mis-translated as lignite] power plants was relatively slow. The diagram for that event:
(Yellow: nuclear energy, brown: low-grade coal, black: high-grade coal, orange: gas.)
The study also contains long-term statistics. Here the market price against conventional load:
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What is to be done? The minister proposed, what else, a market participation of renewables -- speak: if conventional producers claim that they can't reduce their output fast enough to respond to shrinking demand, then he wants renewables to power off what they can't sell, too.