Oversupply causes spike in negative electricity prices

The Belgian wholesale market recorded negative electricity prices more often than ever in 2023, financial newspaper De Tijd reported on Tuesday. When prices fall below zero, wholesale consumers receive money to use surplus electricity - but private households are generally unable to benefit from negative prices.

Those who bought electricity on the wholesale market between 3:00 and 8:00 on New Year's Day were paid for using extra electricity. This scenario is becoming increasingly common, the statistics for 2023 show.

Due to oversupply, last year saw a record 222 hours in which Belgian electricity prices fell below zero. This is twice as many as the previous year, according to data provided by Entso-E, the European association of grid operators. It also surpassed the previous record year of 2021, when prices were negative for a total of 160 hours.

More renewable energy

The steep rise in negative electricity prices is due to the growing availability of renewable energy, writes De Tijd. This increase comes on top of the lifetime extension of Belgium's youngest nuclear reactors, which the federal government approved in 2022. When demand is low, often on weekends or holidays, an oversupply of electricity is increasingly common.

As electricity can only be stored to a limited extent, production and consumption must be matched well enough to avoid blackouts. During periods of oversupply, negative prices encourage consumers to use more electricity than they normally would and producers to limit their production capacity.

Dynamic contracts

However, it is difficult for domestic consumers (i.e. households) to benefit from negative prices. The main beneficiaries of overproduction are traders and large industrial consumers. Only private consumers with a dynamic contract, where prices move with market fluctuations from hour to hour, can benefit by shifting as much consumption as possible to hours with negative prices. In Flanders, only 0.06 per cent of households have such a dynamic contract.

Energy market watchdog CREG warned in a recent report to be careful with dynamic contracts, as they can expose consumers to extremely high prices at certain times. More than 80 per cent of Flemish households currently have a variable electricity contract, where prices are adjusted every month or quarter.

^{© BELGA PHOTO NICOLAS MAETERLINCK}

Related news:

Belgium generates more electricity from renewables than from fossil fuels for first time

In 2023, wind and solar energy accounted for 27.7 per cent of Belgium's electricity production. This is a notable increase from the 13.4 per cent in 2019 and 19.5 per cent in 2022, De Standaard reports. It is the first time that Belgium has produced more electricity from renewable sources than fossil fuels. In 2023, renewables - solar, wind, biomass and waste - accounted for more than 30 per cent of the energy mix, according to calculations by the specialist website Energy-charts.info. In absolute terms, renewable energy, with 23,460 gigawatt-hours (GWh), surpassed electricity from fossil fuels, which accounted for 22,150 GWh. The increase isn't just due to the construction of additional wind turbines and solar panels. It is also the result of reduced electricity production due to the closure of nuclear reactors Doel 3 and Tihange 2 and a further decline in consumption. Within Belgium, 76,900 GWh was produced last year, 13 per cent less than in the previous year. This trend is...

www.belganewsagency.eu

Deal on life extension of nuclear reactors is done, says Energy minister

"The deal with Engie is done," Belgian Energy minister Tinne Van der Straeten told Flemish broadcaster VRT on Sunday. "The political discussions will start tomorrow. The following week it will be discussed in the government and everything will be submitted to the Council of State."

www.belganewsagency.eu