Europe | September 18, 2024

France’s Electricity Prices Turn Negative Amid Low Demand

In a striking development, France has experienced a surge in negative electricity prices, with the first half of 2024 recording 233 hours of negative pricing.

 

Power prices in France turned negative for hours on Tuesday morning amid tepid demand in a struggling economy and increased renewables generation. This situation arises from a combination of decreased demand and increased renewable energy generation, particularly solar and wind power, which has overwhelmed the grid.

Key Factors Behind Negative Prices

  1. Increased Renewable Energy Output: The growth of renewable energy sources has significantly contributed to the oversupply of electricity. The sunny and windy weather during the summer months has led to a peak in solar and wind generation, further exacerbating the situation.
  2. Low Electricity Demand: The demand for electricity has dropped, particularly during weekends when consumption typically declines. This mismatch between supply and demand has resulted in excess electricity on the grid, forcing prices down.
  3. Nuclear Reactor Adjustments: In response to the oversupply, Electricité de France (EDF) has had to take several nuclear reactors offline to balance the grid. This includes halting operations at plants such as Golfech 2, Cruas 2, and Tricastin 1. The reliance on nuclear energy—accounting for about two-thirds of France’s electricity—has made it challenging to adapt quickly to fluctuations in renewable output.

 

Record Low Prices

The day-ahead power prices fell to an unprecedented -€5.76 per megawatt-hour in June 2024, marking the lowest price in four years. This drastic decline highlights the challenges facing the French electricity market as it navigates the transition to a more renewable-focused energy system.

Implications for Energy Producers

With negative pricing conditions, some renewable energy producers may be required to curtail generation to avoid incurring fees associated with oversupply. This situation raises questions about the economic viability of certain renewable projects and the need for better energy storage solutions to manage excess production.

Source: OilPrice.com