Renewables

Curtailments, record-low power prices threaten renewables investments in Greece, Spain

Record low power prices and curtailments threaten renewable investments in Greece, Spain

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Published

April 20, 2024

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Published:

April 20, 2024

Country:

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Renewable energy developers have underestimated the effects of curtailments and low wholesale prices, leading to the danger of bankruptcies in countries like Spain.

In April, the average wholesale electricity price in Spain reached a record low of just over EUR 5 per MWh, while in Greece negative prices were registered for the first time as well as zero prices for many consecutive hours, severely affecting renewable energy producers.

According to a recent presentation by Stelios Loumakis, the head of the Hellenic Association of Photovoltaic Energy Producers (SPEF), during the days with high renewables production there are offers of around 3 GW with prices slightly above zero.

They are submitted in the day-ahead market (DAM), primarily by producers who are trying to keep the final price above zero to receive state support through their contracts for difference (CfDs).

When the price is zero or negative for at least two hours, the subsidies are canceled, according to the regulatory framework.

The phenomenon affects renewable electricity plants commissioned after 2019, with a total capacity of around 6 GW, which do not enjoy allocation priority in the system either.

Loumakis: Greece’s goal to become a net green power exporter cannot be achieved under the current conditions

The situation is even worse if regional power trade is taken into account. In Bulgaria, the final price regularly becomes zero or negative during peak production at noon, which turns Greece into a net importer during such hours if its own price is even slightly above.

Loumakis added that prices at or below zero make producers indifferent to curtailments, since they get paid nothing anyway. In turn, it will erode interest in investing in Greece, which up till now stood at high levels. It is why Loumakis has asked for a complete halt in the licensing of new projects.

He also added that under these circumstances, Greece’s goal to become a net green power exporter for the region cannot be achieved.

Divesting and bankruptcies are possible

It should be noted that the Greek government submitted a new bill of law that removes the so-called 5% rule for curtailments. Until now, a renewable electricity plant that produced 100 MWh per year was subject to total curtailments of up to 5 MWh. Now the rule will be removed and grid operators will be allowed to cut production as they deem necessary.

Spain also faces issues from low prices and curtailments. The average price for April was just EUR 5 per MWh. Energy service provider Our New Energy told Montel that bankruptcies are a possibility looking forward, since market players are already looking into divesting.

The issues will have to be resolved for the renewables penetration to reach the 2030 goal, which for Greece stands at 80%, compared to the current 55%.

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