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Home/Negative power prices and “6-hour rule” impact revenues of German renewables

Negative power prices and “6-hour rule” impact revenues of German renewables

Since the introduction of negative day-ahead prices at the European power exchange EPEX SPOT in 2008, the occurrence of negative-price periods has drastically and continually increased. This affects the so called “six-hour rule”, a law for German subsidised renewables specified by §51 of the EEG 2017: For renewable plants built after 01.01.2016, subsidy payments cease if day-ahead prices are negative for at least 6 consecutive hours. We have analysed the topic for its applicability to revenues for renewables. 

Major points are:

  • Increased renewables generation decreases residual load – less thermal generation is needed.
  • Higher flexibility for thermal capacities in past years, but still add up to a must-run base of between 15 and 20 GW – oversupply in hours with high renewables generation leads to increased occurrence of negative prices.
  • The 6h-rule was designed to incentivise curtailment in hours of overproduction. However, in the face of inaccurate day-ahead weather forecasts and high subsidy levels, curtailing and losing subsidies with certainty is riskier for operators than having to accept negative prices in case the 6-hour-rule applies.
  • For an average offshore wind park, the losses through forgone subsidies in the context of the 6h-rule lie between 5 and 8 million EUR/year and are significantly impacting current valuations.
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  • The occurrence of negative-price periods has drastically and continually increased, effecting the 6-hour-rule for German subsidised renewables and culminating in losses in revenue.

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