Why Germans Are Being Paid To Use Power

Authored by Kent Moor via OilPrice.com,

Germany’s drive to use renewable sources of energy seems to be bearing fruit. Beginning last weekend, prices for electricity in the country declined below zero.



That means consumers are being paid to use the power, rather than the other way around.

This isn’t even the first time this has happened. According to one of Europe’s largest electricity trading exchanges (the EPEX Spot), it has happened more than 100 times in 2017.

All of this would seem to bode well for German households, long regarded as operating under the highest energy prices on the continent.

Well, not quite.

But someone else is getting paid.

And the whole matter has crucial implications for where the energy industry is going next…

Given the heavy amount of taxes and fees charged for power, the wholesale cost factors in only about 20 percent of the real price charged to the average residence.

That means that, while the period of negative costs helps, prices are still going up for German households.

Meanwhile, bigger wholesale users – industry, factories, and other primary end users – do see a nice pop. According to EPEX Spot figures, for example on December 24, such major consumers were paid about €50 ($59.50 at current exchange rates) per megawatt-hour (MWh).

The price decline results from a combination of low demand, warmer than usual temperatures, and the prevalence of ample winds that provided an abundance of wind power generation.

All of this results in excess supply that needs to be moved along the grid.

Due to the lack of efficient or effective battery and storage systems, electricity that is produced must be used.

It has become a traditional tradeoff between peak and off-peak hour generation or usage. The recently emerging German largess in solar and wind power has just accentuated the situation.

Meanwhile, variations on the demand side tend to contribute to supply excesses during times of low usage, such as weekends, and holiday periods. Both of those, of course, hit this past Sunday.

With the price tag for Germany now well over €100 billion, it would appear that the move to renewable, cleaner, energy has been successful.

Well, not so fast…

What the Future of Energy Will Look Like

Negative prices notwithstanding, the move to increase the contribution made by solar and wind has created its own uncertainties. Both sources need backup energy sources for when sunlight and wind are not present.

And then there is the opposite extreme. Wind on average provides less than 14 percent of the daily power on the German grid.

But on very windy days it can easily provide many times that.

Unfortunately, traditional sources such as coal-fueled power plants and the nuclear reactors that are being phased out nationwide cannot be turned down rapidly enough when renewables dump additional power on the system.

The result is either negative prices or lack of immediate access to power during those spells in which the combination of sources don’t meet expectations.

Other European countries – France, Belgium, Switzerland, the Netherlands, and even Great Britain – have also had their own experiences with negative pricing. France generates well over 70 percent of its power from nuclear, meaning the negative pricing phenomenon is hardly a result of only new renewable energy volume.

Nonetheless, German experiences have been more persistent, even when the country has been able to export excess power. The late December episode is the most recent.

But a similar bout in October resulted in payouts to consumers almost twice as high.

Experts are pointing toward the major revision both Germany and the wider European grid system must now undertake. Until this spasm of negative pricing, the older view of global power systems had been considered adequate.

Not any longer.

As one specialist noted this week, “we now have technology that cannot produce according to the demand, but is producing according to the weather.” This has become the main uncertain ingredient in the new age of rising renewable sourcing.

And one thing that’s becoming increasingly evident is that the new environment is providing a new stress on the wider power system.

This sets the stage for a range of possible changes in regulations and fee structures meant to encourage average households to tailor their energy use to periods of energy supply. That would seem to oblige some “carrot rather than stick” approaches.

Of course, that would mean benefits in lower costs moving directly down to the household level. That may take a bit more politics than just oddities in the energy grid.

Which means the push for renewables and energy storage will continue unabated in 2018.


HenryKissinger… Mementoil Fri, 01/05/2018 - 03:57 Permalink

Doesn't add up in the real world, not for long anyway.

It certainly does:

1- first renewable energy projects got contracts with GUARANTEED buying at a GUARANTEED price, so that they still get paid even if the grid cannot take the energy and are rather shut down; so they might as well use the same money to pay the industry to produce something instead of paying wind farms to NOT produce energy

2- old skool massive plants like NUCLEAR are too slow and difficult (i.e. /DANGEROUS) to throttle down or even worse SHUT DOWN,
and take many hours to power up or throttle up, since they do not want to loose the oportunities to sell energy in the short term, it is cheaper to pay somebody to maintain consumption than getting caught in a slow/DANGEROUS throttle/shut down process and loose the chance to sell energy

3-nuclear has stupid crazy nonsense subsidies, so there

4-german grid has being built based on central massive plants and not for a swarm of small distribuited sources, so it has not been updated, because rewiring a whole industrial country costs money, and making the industry pay for that would hurt the "economy"... when households found out THEY were the ones paying the grid rebuild, they got a bit pissed off

In reply to by Mementoil

ed31337 skbull44 Fri, 01/05/2018 - 11:49 Permalink

So, you believe some guy in Australia telling you there was only 10 hours of sunshine in Germany for the entire month of December? The rest of the month was complete darkness eh?

I call bullshit. Maybe there was only 10 hours of cloudless days, but even on a cloudy day there is light outside. My own personal 5KW solar array still produces significant amounts of power on cloudy days. It's less power than on clear days, sure, but it's still producing.

There is so much ridiculous FUD against solar. Panels are cheap nowadays, go buy some and test it out yourself. Fuck the astroturfers and their deceptions.

In reply to by skbull44

D503 Fri, 01/05/2018 - 03:56 Permalink

You keep calling them renewables, but I don't see them powering the manufacturing of themselves. Pouring oil in one end and getting shit variable unstorable power out the other is not "renewable."

The_merovingian Fri, 01/05/2018 - 03:59 Permalink

Spoke to a manager at EnBW, one of the biggest electricity producer in Germany a few years ago. He told me that the government was basically out of their mind and forcing them to scale up renewables even though they told them the grid would not be able to cope with it. The German power grid almost collapsed in January last year because of cloudy weather and little or no wind.

They have decided to retire all their nuclear reactors after running them 10 years longer than what they were built for, removing most of the base load. Now they are replacing them with coal and gas to fill the gap.

The result is that Germany is now ironically one of the countries that produces the most renewable energy and is also one of the most polluting in Europe because of all the coal power plants.

Song_Of_Roland The_merovingian Fri, 01/05/2018 - 07:26 Permalink

It almost collapsed because Germany was consuming 80 gigawatts in January (coldest January in 30 years). From what I read (the head of the one of the unions here in Germany had given an interview), all reserve stations were brought online, meaning energy companies had nothing left if it had gotten colder and more energy had been needed.

I remember also reading somewhere that Germany and Japan both had filters for emissions from their coal power plants that were able to filter out the great majority, thereby making coal much cleaner. However, the Green Party here demonstrated against giving coal more money, etc. to even get the better filters...

In reply to by The_merovingian

BarkingCat The_merovingian Fri, 01/05/2018 - 11:52 Permalink

Russia is happy to sell them natural gas.

If Germany does not mine enough if its own coal then Poland will be happy to sell them some as well.

If that is still not enough then Ukraine can probably spare some and then Russia can sell them whatever else they need.

Considering that they are already polluting their genome why the hell not top it off with pollution of the environment?

In reply to by The_merovingian

Fahq Yuhaad Fri, 01/05/2018 - 03:59 Permalink

Another dose of toxic propaganda from oilprick.com

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Quantity vs quality

JimmyRainbow Fri, 01/05/2018 - 04:47 Permalink

talking of "consumers" is misleading here.

and "the grid" is in shape like american railways, not maintained for decades and all the money from small consumers spent on nuke plants and not on the grid. so a lot of theater. additionally prices for small "consumers" have been raised like every year before end of 2017.

the small consumers pay for the complete shit while the big money enjoys the co2 and energy exchanges.

New_Meat Fri, 01/05/2018 - 05:35 Permalink

Earlier article on Germany having so fucked up its power production/power distribution system that it was hurting the entire economy.  Here's another "anecdote."

jin187 Fri, 01/05/2018 - 05:39 Permalink

Not sure why storing it is so hard.  Get Tesla to hire half the country, and Mexico too I suppose, since we can't be rid of them anyway.  Fill these damn power plants with enough Li-ion battery packs to recharge the sun.  Problem solved.  We can pay for it by using all the power to mine BTC with quantum computers.

Song_Of_Roland Fri, 01/05/2018 - 06:53 Permalink

Reality: My bills are not decreasing, even when the weather is warmer like it is now. Stromsteuer (electricity tax) and EEG-Umlage (forced contributions to renewable energies) are both increasing, so even if prices do decrease for a day, overall I am still out more and more.

The Count Fri, 01/05/2018 - 07:31 Permalink

Thats what happens when you have government(s) that is out of control. They want to shove their cockamamie ideas down the citizens throats not matter what. As long as their respective parties stay in control. Greetings to comrade Merkl! 

Youri Carma Fri, 01/05/2018 - 07:42 Permalink

When there is much wind stay inside and work hard.

When there is much sun stay inside and work hard.

When there is no wind and sun stay inside and sleep.

Angry Plant Fri, 01/05/2018 - 08:45 Permalink

Yay an economy powered by unicorn farts! Only problem is when the bill come due for all equipment used to power the system and you have no money to pay the costs. Because you didnt sell product at the costs it took to produce.

rejected Fri, 01/05/2018 - 09:12 Permalink

As a solar user they are correct about wasting power. Wind power would be the same. I find ways of using excess power but I have batteries. Even then when they're charged there is nowhere for extra available power to go.

Their mistake is the shutting down of coal and other power plants which are by far the most efficient. Even though I can disconnect from the grid on many days,,, many other days I need the power because of bad weather.

The weather will change and if they shut down too many of their conventional plants it will be a disaster. Since they have no batteries to 'save' energy they will be SOL.

Also by giving away the power, they will not generate the money needed when inverters, panels and other equipment start failing. The monies collected by the never ending taxes and fees will be wasted, per usual.

The whole thing is a disaster waiting.

UndertheDRADIS Fri, 01/05/2018 - 09:47 Permalink

I know that in the US that Texas has its own electrical grid. The state grid is still connected to the larger US/Canadian distribution system. Are the European systems all self contained and closed? Is there no continent-side power distribution system and agreements?

Dominus Ludificatio Fri, 01/05/2018 - 09:49 Permalink

Time to embrace the hydrogen industry.The best method to store electricity is to use it for hydrogen production. It is just a matter of time until they figure out how to substitute the precious metals used in hydrogen power cells to make them more economical.

Juliette Fri, 01/05/2018 - 11:38 Permalink

Germans have to pay the highest electricity prices in Europe and the whole world. We don't get paid for it.


What happens is that the big energy companies are forced to pay foreign energy companies in neighbour countries hefty sums to use the superfluous electricity from the stupid renewable energies - wind, solar etc.


So we pay for our neighbours to get paid for taking our electricity. Germany has become synonymous with stupidity ...