Blog August 16, 2019

During the weekend of 10-11 August, Germany experienced an impressive upsurge in wind generation. Abundant “cheap” wind energy coupled with must-run thermal capacity of about 15-20 GW on days with low weekend demand leads to negative prices. This weekend was no exception: prices on the day-ahead auction took a dive into the negative territory with the lowest price recorded at -49.62 EUR/MWh for hour 15:00 CET on 10 August (Figure 1).

Day-ahead auction prices
Figure 1: Day-ahead auction prices for Germany. Source: EPEX Spot 

How is Germany dealing with this upsurge of green energy when there is low demand for it and there is no possibility to store it? As always with the power market, the dynamics are complicated.

Subsidised renewable assets are subject to the ‘six-hour rule’, defined in §51 of the Erneuerbare-Energien-Gesetz (EEG) 2017, which states that renewable plants built after 1 January 2016 will lose the production subsidy payments if EPEX Spot day-ahead auction prices are negative for at least six consecutive hours.

In practice, this means that wind turbine operators will shut down production during those hours to avoid selling at negative prices without compensation. Figure 2 illustrates how onshore and offshore wind generation actuals were significantly lower compared to Tennet’s (the Transmission System Operator, or TSO) day-ahead forecast during the six hours when day-ahead prices were negative. 

Wind generation forecast and actuals, in MW
Figure 2: Wind generation forecast and actuals, in MW. Source: Tennet

In our blog on 3 July 2019, Direct Marketing Companies in Germany and Einsman: Dealing with Feed-In Management Challenges, we discussed how infrastructure bottlenecks make feed-in of renewable energy a challenging undertaking. Certain transmission lines reach their limits while trying to move electricity from wind-rich northern Germany to demand centers in the south. To alleviate the congestion and secure the network, the electricity grid operator, either DSO or TSO, reduces or switches off production from a wind- and-solar installation. This is done as a last resort measure and is known as feed-in management (Einspeisemanagement) or “Einsman.”

We observed that in the northeast of Germany (50 Hertz network), high voltage lines connecting Pasewalk to Vierraden reached critical volumes above 300 MW, or above 70% threshold of the line capacity, during those same hours on Saturday (Figure 3). 

Physical electricity flow
Figure 3: Physical electricity flow in MW on Pasewalk-Vierraden line. Source: Genscape, 50 Hertz

However, the reduced output connected to the six-hour rule, as well as all the available capacity on the other lines in the area, did not cause any wind feed-in curtailments or Einsman in that part of Germany.

The situation is quite different for the north-west of Germany. A lot of Einsman measures were applied in the Schleswig-Holstein area during the same period. In total, 1,500 Einsman messages were published on 10 August, and for the negative hours we looked at earlier, an average of 450MW of generation was curtailed.

Weighted-average hourly Intraday prices for Germany
Figure 4: weighted-average hourly Intraday prices for Germany on 10 August. Source: EPEX Spot

As discussed in our 3 July Blog, market participants impacted by curtailment measures will attempt to balance their portfolio in the Intraday market. As Figure 4 illustrates, the net result was positive prices on the Intraday market for the same hours. 

Closing a “short” position on the Intraday market was mandatory to avoid prohibitively high costs of balancing energy for the same hours. Figure 5 shows Secondary and Minute-Reserve tender results for positive regulation for the hours in question. 

Balancing market tender results for 10 August
Figure 5: Balancing market tender results for 10 August. Block 1 shows Secondary Reserve and block 2 shows Minute-Reserve. Source:

The perfect storm during the weekend of 10-11 August in Germany created challenges for those affected and opportunities for the informed. Genscape helps clients better prepare for such challenges and transforms them into opportunities by providing both data and insight for quick analysis and more accurate predictions. 

Our PowerRT platform shows market dynamics as they happen, including live physical electricity flows on bottleneck lines which could trigger Einsman measures and resulting short-term market activity. To learn more about our PowerRT platform or to request a demo, please click here.