Negative power prices “a cause for celebration” – opinion

The fact that power prices in Germany occasionally turn negative and lead power producers to pay their customers for absorbing excess electricity should be no cause for concern but rather for celebration, energy think tank Agora Energiewende’s* head, Patrick Graichen, writes in a commentary for Die Welt. Providing a good for lower prices or even for free rather than not providing it at all is “a basic principle of macroeconomics, known as ‘avoiding opportunity cost’,” Graichen argues. Some power plant operators figure that it is cheaper to sell their electricity at negative prices than to shut the plant down and turn it back on again a few hours later, he says. The more often this happens, the greater the incentive for operators to invest in flexible plants – which many of them do, Graichen says. He explains that this increase in flexibility is not likely to have happened if there were no negative power prices, and that this also holds true for more flexible industrial plants and the financial attractiveness of power storages. Graichen therefore calls negative prices “the greatest driver of making the energy transition’s power system more flexible”.

Read the commentary in German here.

See the CLEW factsheet The causes and effects of negative power prices for background.

*Like the Clean Energy Wire, Agora Energiewende is a project funded by Stiftung Mercator and the European Climate Foundation.