Zero electricity prices for six hours in a row for the first time in its history was recorded by the Greek system last Sunday (May 28), “copying” images from the systems of northern European countries with high penetration of renewable energy.

In addition, this past weekend, ADMIE for the first time implemented an unprecedented reduction in clean energy to maintain system stability. For 12 straight hours on Saturday and 11 hours on Sunday, three hours apart, the competent levels of ADMIE were continuously throwing green megawatts out of the system to keep it standing still and not plunged into darkness.

Renewable energy production last Sunday reached a very high level of 80% of total domestic production, but this is not the highest figure that has been recorded in history. On October 7 last year and for five consecutive hours from 11 a.m. to 4 p.m., almost 100% of the demand was covered by renewable energy. However, we had no zero prices, no power cuts, no average MWh price of €51, which fell on Sunday to return to €88 yesterday and €111 today, levels that have fluctuated over the past few weeks. .

The distinguishing factor is a combination of renewable energy overproduction and low demand, parameters that are consolidating as renewable energy penetration continues to expand and exceed 10,000 MW in 2022, and demand has been steadily declining for 11 months, having recorded in the first quarter of the year. decrease by 11% compared to the same period last year.

Overproduction and zero electricity prices are the problem facing all of Europe just a few months after the desperate efforts and concerted campaigns of European governments to limit consumption and contain prices. Europe paid dearly last year for its high dependence on natural gas; this year it is paying the price for greater heterochronization of renewable energy development and storage systems.

The problem is now so acute that a ‘bell’ has rung at the managerial level in Europe, and central coordination initiatives to address this problem are expected very soon. It has been found that there is a problem of overproduction in the whole interconnected system of Europe, as can be seen from the frequency of the system, which, as the competent actors explain in “K”, is an index of production and demand.

The tool used by all European operators to maintain the stability of their systems is to reduce the load of RES, while the competent authorities are currently looking for ways to control (capacity) also in small photovoltaic systems and even rooftop systems. While we don’t expect to see demand-driven campaigns, it’s safe to say that austerity campaigns have begun to fade in many European countries.

“Last winter, we only talked about where to get more electricity. We are now thinking about how to limit production. We are going from one extreme to the other,” Jukka Ruusunen, head of the Finnish system operator, said last Thursday as the wholesale price of electricity fell into negative territory from noon and throughout the day, which he called a “historic moment”, as such values ​​were usually observed at night and for fewer hours.

“Now there is enough electricity and it is almost emission-free. So you can feel comfortable using electricity,” he said, indirectly calling for more consumption.

The Commission itself, in its report for the fourth quarter of 2022, assesses the high level of penetration of renewable energy, as Europe potentially moves away from the unprecedented energy prices of last year, as a new problem for the balance of the energy system. It even contains traders’ assessments of the possibility of seeing sub-zero prices in some European markets this summer as natural gas prices continue to free fall.

The number of hours with negative wholesale prices in Q4 2022 (272 hours) was 157% higher than the corresponding period in 2021. Most hours were in December (112 hours) and coincided with a decline in demand. They account for 41% of negative prices in the quarter and 20% of negative prices in 2022. The most negative prices were recorded on December 31, when weak demand and mild weather, combined with strong winds, led to zero prices in the German system. in 22 hours, since wind generation covered 70% of consumption. In 2022, the most negative values ​​were recorded in the Belgian zone (112 hours), followed by the Netherlands (85), Germany (69), Ireland (51) and the Danish western zone (38).

€200 million for electricity subsidies in energy-intensive industries

A €50/MWh subsidy for 70% consumption and conditions for an energy-intensive industry is provided by a scheme submitted for approval to the Commission shortly before the end of his term by the Minister of Environment and Energy, Kostas Skrekas. The Greek subsidy scheme, which Mr Skrekas announced in February, is based on temporary EU rules. for state assistance in overcoming the energy crisis, which was used by many EU countries, primarily Germany. The subsidy covers energy-intensive industries operating in the steel, aluminium, paper and cement industries. The condition for them to receive the subsidy is a 40% reduction in EBITDA in 2023 compared to 2021. The subsidy calculation formula takes into account the current price in the wholesale market and the price paid by the energy-intensive industry in April 2021. The total subsidy amount for the respective industries is reported to be 200 million euros, and the payment of money will begin in April 2024. The scheme excludes companies that have entered into or are about to enter into long-term contracts for the supply of electricity, as provided for by Law 3849 (section 61).

According to industry circles, even if the Greek scheme is quickly approved by the Commission, its implementation requires legislative regulation, which will be the responsibility of the new energy minister. According to industry estimates, the approval of the Greek energy-intensive subsidy scheme will not be delayed more than two weeks, as it took about the same time to approve similar mechanisms in other European countries.

The subsidy will support efforts to reduce the energy costs of the country’s energy-intensive industrial enterprises, which are subject to international competition, since since the end of 2022, when the first fixed pricing contracts with PPC expired, they are subject to wholesale market fluctuations. . Bilateral contracts with renewable energy producers are a tool that the domestic industry has also begun to use, but they cannot pay off before the contracted facilities are installed and put into operation.