Negative Prices Expected in Hungarian Electricity Market
Hungary’s Solar Power Expansion Raises Concerns of Negative Prices in the Future
Hungary has seen a significant increase in the number of solar power plants in recent years, leading to a surplus of energy supply. However, concerns are growing that if demand does not match this supply, negative prices may be experienced within the next 3-5 years.
The expansion of solar power plants in Hungary began two years ago, and the total installed capacity has now exceeded 5,000 megawatts. There are also pending requests that, if approved, would provide an additional 5,000 megawatts of capacity. Gergő Batta, Deputy CEO for Operations at MAVIR, has shared his thoughts on the situation. Batta emphasizes the importance of monitoring how many of these requests actually materialize into operational projects, especially considering that many are based on business investments rather than subsidies.
Solar power is considered a sustainable source of energy as it relies on renewable resources. However, Batta raises concerns about its long-term financial and technological sustainability. If there is a significant disparity between supply and demand, prices are likely to decrease. The prices of solar power have already been declining, but this trend is expected to become even more prominent. Recently, the German power exchange witnessed negative prices of minus EUR 500 per MWh on a weekend day with lower industrial demand.
Batta points out that while the demand may have been low, the abundance of strong winds and sunshine resulted in a high supply of energy. This phenomenon is observed across Europe, where varying production waves of renewable energy can cause power prices to fluctuate between negative and positive values. Batta predicts that within 3-5 years, negative prices could occur from 9 AM to 4 PM during the spring to autumn period when the sun is shining.
The current system poses a challenge for power plants as they may not generate any profit during negative price periods. Providers would have to pay to sell electricity, making it crucial for them to balance these losses with income from other sources. One potential solution lies in the development of a market for systemic services, where different energy products could be sold. This shift in the market dynamics will undoubtedly inspire further research and innovation, particularly in the area of energy storage. Storing excess energy during periods of negative prices would allow providers to wait and sell it when prices turn positive again.
As Hungary’s solar power capacity continues to grow, it is essential to monitor the balance between supply and demand to prevent negative price situations. The industry will need to explore innovative solutions to address this issue, ensuring the long-term sustainability and profitability of solar energy in the country.
