April 24 (Bloomberg) -- The price premium for electricity during office hours in Germany slumped to the lowest in four years and is poised to narrow further as cheap solar output takes a bigger share of the daytime market.
The CHART OF THE DAY shows the extra cost of German power delivered at peak times relative to around-the-clock supplies, and Europe’s increasing share of electricity from renewable sources. German solar capacity is expected to rise to 44 gigawatts by 2017, a 10-fold jump from 2008 levels, according to energy consultant Inenco Group Ltd.
“Once the solar farms are in place you cannot disconnect them like you can with wind to stop overloading,” Gary Hornby, a European power and gas market specialist at Inenco in Lytham St. Annes, England, said yesterday by e-mail. “The spread will continue to narrow.”
German solar-power generation, which gets priority access to the grid along with other renewable sources, rose to a record 24.1 gigawatts on April 17, according to data from European Energy Exchange AG in Leipzig, Germany. The surge in solar output pushes more expensive coal- and gas-fired production out of the generation mix and drives down wholesale costs.
German year-ahead peakload electricity cost 43.90 euros ($60.65) a megawatt-hour yesterday, 9.35 euros more than baseload, broker data on Bloomberg show. The spread touched 9.20 euros on April 15, the narrowest since January 2010, and averaged 13.30 euros in the past five years. The gap was almost 40 euros in 2008.
The share of renewables in Europe’s power generation almost doubled in the past decade to about 26 percent, according to Energy Brainpool GmbH. The portion is expected to climb to 36 percent by 2020, data from the Berlin-based energy consultants show.
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