Free Power as Germany Faces Warmest Christmas in 19 Years

German utilities may have to pay power users during the warmest Christmas in almost two decades if wind generation threatens to overload the country’s grid.

Temperatures on Dec. 24 will be as high as 16 degrees Celsius (61 Fahrenheit) in the southwest of the country, the warmest for that date since 1983, according to a forecast by Deutscher Wetterdienst. Power prices for next week have fallen 50 percent over the past five days to a record low.

Chancellor Angela Merkel’s government has encouraged construction of electricity generation from the sun and wind by giving producers favorable rates and priority access to the grid as the country seeks to exit nuclear energy. That means utilities including EON SE and RWE AG (RWE) sometimes prefer to pay power users rather than halt fossil fuel-fed plants when the country’s electricity output surpasses demand.

“Operators may just decide to accept that they are giving away power and money during the Christmas week for a few hours rather than putting up with even higher costs for switching their units off,” said Juergen Rogalla, the head of power plant operations at Stadtwerke Bielefeld GmbH, a regional utility supplying 280,000 households with power and gas.

Week-ahead baseload power, for around-the-clock delivery, fell as much as 10 percent to 23.20 euros ($30.60) a megawatt- hour today, the lowest since Bloomberg started compiling broker data in September 2007. German wind generation on Dec. 24 may rise as high as 13 gigawatts compared with to about 7 gigawatts today, according to the website of Meteologica SA, a Madrid- based weather forecaster.

“We have seen negative prices for some hours of next Tuesday morning,” Ricardo Klimaschka, a power trader at Energieunion GmbH in Schwerin, said today by telephone. “It depends on the wind generation as well.”

‘Taken Precautions’

Renewable power use rose 8 percent this year, boosting its share to 12 percent of total consumption, according to preliminary data from Arbeitsgemeinschaft Energiebilanzen AG, an industry lobby.

Total available generation capacity will fall to 59,300 megawatts on Dec. 24 from 61,700 megawatts today with most of the drop in coal output, according to data from the European Energy Exchange AG.

“Operators may have taken precautions”, Rogalla added. This would especially apply to more flexible gas plants that run during peak demand.

To contact the reporter on this story: Julia Mengewein in Frankfurt at jmengewein@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

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