Consumers in Europe received a Christmas gift – low or even negative electricity prices. Of course, only the ones with appropriate tariffs contracted with suppliers could make use of it. Even though prices on the power exchanges in the Western Balkans were similar, even fewer consumers benefited from the situation. It also caused issues for electricity producers, in the first place for coal power plant Gacko in Bosnia and Herzegovina.
Rudnik i Termoelektrana Gacko (RiTE Gacko), a subsidiary of government-controlled Elektroprivreda Republike Srpske (ERS), has stopped production due to, it claimed, low market prices.
Episodes of very low or negative prices started in Europe more than 15 years ago, largely as a result of an increasing share of renewable energy sources in production. Such events occur in the summer when solar power output is high, like this year in July, and in the winter with spikes at wind farms. The other important factor is the drop in consumption during holidays.
The time around Christmas is perfect for the phenomenon.
According to data from EPEX SPOT, the prices for December 24 were negative in Germany and Great Britain while in the rest of Western Europe they didn’t exceed EUR 6.5 per MWh. Until then, the range in December was EUR 100 per MWh to EUR 150 per MWh.
The price at SEEPEX dropped to as low as EUR 0.03 per MWh
It was similar on the Serbian power exchange, SEEPEX. In the early morning hours on Sunday, December 24, electricity cost EUR 0.17 per MWh, and tumbled to as low as EUR 0.03 the next day. Prices were similar to the ones in the rest of Europe until the crash as well.
What happened in BiH? On Sunday, RiTE Gacko announced it would halt electricity production at midnight, saying the stoppage was planned, local media reported.
Later, Nezavisne novine reported that the reason was actually the low level of coal reserves, which RiTE Gacko denied.
Skoko: Production would be absolutely unprofitable
Maksim Skoko, acting director of RiTE Gacko, claimed that the low market price of electricity was the only reason for halting turbines, arguing it was unprofitable to operate in such conditions.
On Sunday, the prices on SEEPEX in Serbia ranged from zero to EUR 25 per MWh, he pointed out. RiTE Gacko exports electricity so there was no case to go on, Skoko underscored.
He did acknowledge that some maintenance was necessary alongside additional coal quantities in stockpiles, but reiterated that it wasn’t the main reason to suspend production for a few days.
Of note, the Gacko coal plant is one of ERS’s pillars because together with the Ugljevik coal plant it accounts for 56% of the company’s power output. They both have 300 MW in capacity. ERS is one of three state-owned electricity producers in the country.
Kušljugić: An opportunity for the region, but not without coordination
Professor Mirza Kušljugić from the Faculty of Electrical Engineering at the University of Tuzla told Balkan Green Energy News that the messages from RiTE Gacko indicate operating costs were higher than the market price.
Prices crashing in Europe during the Christmas and New Year holidays, especially when the winter is mild, is a common phenomenon, he said and attributed it to the European electricity market design.
Power utilities have flexible production portfolios as they operate large hydropower plants with reservoirs
However, in his words, with the increase in the share of renewables, prices go low or negative mainly when solar and wind power production jump.
As a further expansion of variable renewables is planned in Europe, prices are expected to vary significantly, too, in proportion to changes in weather conditions, the chairman of RESET’s managing board explained.
Asked what it means for the Western Balkans, Kušljugić said most power utilities in the region have flexible production portfolios as they operate large hydropower plants with reservoirs.
The finalization of NECPs is an opportunity to change something
The region has the biggest hydropower plant flexibility in Europe, which it can utilize on European power exchanges, though only through a regional coordination mechanism, implying coordination in the decarbonization process as well, he said.
The finalization of national energy and climate plans (NECPs) is an opportunity to seriously analyze the huge potential of power utilities in the Western Balkans, Kušljugić asserted.