German Solar Records May Keep Traders Busy on Weekends

Germany’s electricity traders may face busy weekends as sunny weather positions the nation for a season of solar power records.

After Wednesday’s all-time high of 27.7 gigawatts, Europe’s biggest electricity market is poised for new highs in the next few days or weeks, according to group meteorologist Marcus Boljahn at MeteoGroup. The previous record of 24.2 gigawatts was set on June 6, 2014, when fewer solar panels were installed, the weather forecaster said. One gigawatt is about equal to the capacity of a nuclear reactor.

“A solar generation record may impact prices, especially on weekends when demand for electricity is low, less on weekdays,” Hendrik Saemisch, chief executive officer of Next Kraftwerke GmbH, said Wednesday in an interview from Cologne. The company sells power from renewables on the German intraday and balancing markets.

Germany’s planned decade-long, 120 billion-euro ($127 billion) shift to cleaner energy from fossil fuels has made the nation the biggest economy in the world to rely so heavily on renewable power. Unpredictable solar and wind energy can flood the grid, resulting in negative power prices, when generators must pay consumers to take electricity. The risk is higher at weekends, when usage slows as offices and factories shut.

Longest Day

“From Saturday on, most regions in Germany will get high-pressure weather, and therefore a lot of sunshine,” MeteoGroup’s Boljahn said Wednesday by phone from Berlin. “Until June 21, the longest day of the year, the possible solar output will be rising daily.”

Germany got a record share of about 26 percent of its electricity from renewables in 2014, a portion the country aims to increase to 45 percent in the next 10 years. Solar accounted for 22 percent of total renewables, according to the German Association of Energy and Water Industries, a lobby group.

Intraday German power prices were negative for eight hours on Sunday in continuous trading, dropping as low as minus 79.94 euros a megawatt-hour, according to Epex Spot SE data. Prices also turned negative for two hours on Wednesday.

“Traders and marketers of renewable energy often have to think about reducing power-plant output if prices turn negative for several hours,” said Saemisch at Next Kraftwerke.

24 Gigawatts

German solar output will peak at 21.2 gigawatts on Saturday and about 24 gigawatts the next day, according to data compiled by Bloomberg.

“New German solar records wouldn’t be surprising,” Ricardo Klimaschka, a power trader at Energieunion GmbH, said by phone Thursday. “Weekends are increasingly being treated more carefully, and rightfully so.”

Germany has about 39 gigawatts of installed solar capacity. While installations expanded by more than 22 gigawatts in the three years since 2010, they have slowed to as little as 100 megawatts a month after Chancellor Angela Merkel’s government cut subsidies.

German power for delivery in May fell 0.5 percent to 28.45 euros a megawatt-hour at 5:35 p.m. in Berlin, broker data showed. The contract touched the lowest level in almost 12 weeks on Monday, two days after day-ahead German power settled at minus 80 euro cents a megawatt-hour in Epex Spot’s auction, the first negative price since August.

“The May contract has reached a low level already and might fall another euro, or even further if we see two or three more of these days,” said Klimaschka. Prices also will depend on maintenance at conventional power plants and the progress of snow melt, he said.

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