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This is how Germany perfected the free electricity model ND
Lars Paulsson & Jesper Starn, Bloomberg, Tuesday May 15 2018

The renewable energy revolution has upended the old utility model and the European power markets more than anything else. Nowhere is this clearer than in Germany – the biggest trading market and where on some days, like Christmas and other national holidays, there’s so much supply of electricity that it outstrips the nation’s demand. The result of this is an electricity price below zero and factories can then potentially earn money for taking the surplus off the hands of producers. And that’s posing questions for utility executives. Do they shut down their plants for a few hours, or keep them online with no chance of making money? “You have to shut for the time being,” said Markus Krebber, CFO at RWE AG. But generators can still make money, and here’s how Krebber explained it to Bloomberg on a conference call. “First, it’s never clear in the forward market what hours will actually be negative, so you have a ‘blended’ power price for a day or a week. The generator sells that contract to lock in a tiny margin and you will never make a lot of money from the hedging. But then you see the daily volatility in the hours and when the power price is negative you shut down your power plant and you buy the power from the market. In the other hours, where prices are higher, you bring on additional capacity from which you earn additional money. The higher the volatility is, the more we can actually make.”

For the full story see: www.bloomberg.com