Solar power production driving prices on North Macedonia’s power exchange

Electricity generation from solar power plants lowers prices on the power exchange, while a decrease in generation leads to price increases, according to an analysis by Ana Angelova, a market operations specialist at the National Electricity Market Operator (MEMO).

The aim of the analysis was to show seasonal trends and highlight the correlation between production from photovoltaic plants, consumption, traded volumes and prices on the day-ahead market of the North Macedonian power exchange. The day-ahead market operates in an isolated mode, MEMO noted in the document.

Ana Angelova used official power exchange data for 2024, with a focus on hours when the efficiency of PV facilities was above 30%.

Consumption was stable throughout the year

A clear seasonal pattern was determined. Electricity consumption remains relatively stable throughout the year, with slight decreases in the spring and summer. In contrast, PV plant generation follows a distinct seasonal pattern – it peaks in the summer and troughs in the winter.

As electricity generated by photovoltaic plants increases, so does the amount traded on the day-ahead market, Angelova stressed.

Prices lowest in April

Prices are the lowest in April, a period associated with milder weather conditions, lower consumption, and increased energy production from solar power plants. However, from the summer months onward, and especially  in winter, prices begin to rise, reaching a peak in November.

The peak in day-ahead market prices in November coincides with a period of low PV plant generation and increased consumption.

“Increased electricity generation from photovoltaic plants is associated with lower prices, while low generation leads to higher market prices, emphasizing the impact of renewable energy availability on price formation. The trend indicates that energy policies should focus on addressing weaknesses during the winter period and harnessing the potential of solar energy in summer,” Angelova pointed out.

Possible solutions

She proposed measures to enhance integration of renewable energy into the energy system, mainly electricity produced from solar panels. The key mechanisms are:

• Flexible market mechanisms (introduction of a 15-minute trading interval, introduction of an intraday market, dynamic tariffs, and guarantees of origin).
• Energy storage technologies (battery energy storage systems (BESS), and pumped storage hydropower plants).
• Alignment with the European energy framework (adoption of grid codes developed by ENTSO-E, coupling of the electricity market with the single European market, the introduction of smart meters, and the application of financial mechanisms such as contract for difference (CfD) and power purchase agreement (PPA)).