German renewable energy helped cut European power prices in April
03 May 2013
Record output from German wind and solar plants helped to reduce European power prices in April, according to Platts the energy data provider.
European continental day-ahead power prices averaged €45.20 per megawatt-hour in April, compared to €55.02 in March and €49.37 in April 2012. Year on year, this represents an 8.5% reduction in price.
Platts credits this to a number of days when there was record output from renewable sources in Germany, especially on April 24 when solar photovoltaic output exceeded 23GW.
That is the equivalent of 20 nuclear power plants, or one third of the country's working-day afternoon demand.
This is in contrast to UK and continental day-ahead gas prices, which rose in the last 12 months by 17% and 14%, respectively.
“Prices of power for immediate delivery turned bearish across Europe last month, with healthy wind, solar and hydro power output more than offsetting Germany’s production slowdown from the nuclear plant maintenance period,” said Andreas Franke, Platts power editor.
“German day-ahead, peak-load power output for a week day fell to a record low April 18 at €27.15/MWh, as wind and solar power output reached an hourly record of 36GW.”
Germany is installing new solar photovoltaic capacity at a staggering rate: around 270MW per month. In February, for example, this new capacity was spread out amongst more than 8,300 different systems, many of them community owned, and the largest of which was a new solar park in Brandenburg with a total capacity of 8.2MW.
There are complaints in Germany that subsidies for solar power are disproportionately high, taking up half of the country’s funding for renewables but providing only 20% of its renewable energy. As a result, the feed-in tariff rate is being cut by 1.8% at the end of this month.
Nevertheless, solar is very attractive and not just in Germany. 97% (1,581MW) of
97% (1,581MW) of the new generation capacity in the California transmission system operator’s schedule for installation in the second half of 2013 is solar. The rest is biomass (52MW).
It is seen as a trend, as a renewables are displacing natural gas in the state. “This is the shape of things to come,” observed V. John White, executive director of the Center for Energy Efficiency and Renewable Technologies (CEERT).
In many places, such as Italy, Spain, Germany, Portugal and the US Southwest, solar is at grid parity. In other words, it is the same price to build a solar plant as a gas or coal one.
Solar is therefore getting cheaper, while gas and coal (everywhere except Germany) are getting more expensive.
Moreover, the end could be in sight for the cut-price natural gas boom caused by the North American shale gas revolution, which also brought cheap coal to the UK. In the first four months of this year, coal-based electricity generation in the United States increased by 12.7%, while that from natural gas fell 10.7%, according to Gencsape.
Unless the US does install more renewable energy, its recent trend of reducing greenhouse gas emissions will be reversed.
Germany still does rely heavily on coal particularly in the east of the country, despite the solar boom.
It remains the world's biggest producer of coal, and the country needs nuclear, coal or gas for base power to ensure a continuous supply, as does the UK. This is giving rise to talk of a tax on lignite being introduced. The UK's answer is a carbon price floor.