Electricity prices fell dramatically last weekend, with costs even falling below zero on Sunday.
Wind turbines running at full speed (due to strong winds), coupled with six out of seven Belgian nuclear power stations being operational, led to the peculiar situation in which large consumers of electricity were effectively paid to consume energy.
Last autumn, Belgium had only one nuclear power plant available, causing a peak in the price of electricity of 500 euros per megawatt hour (MWh) in November. The situation today, however, is radically different. The price traded on the wholesale market is, on average, 13 euros per megawatt hour (Mwh), with costs occasionally even dropping below the zero mark (-5 euros per Mwh).
The law of supply and demand
The strange fact that consumers of energy can effectively receive money to use electricity is actually explained by one of the most basic laws of economics, namely the principle of supply and demand. In short, when the supply of electricity outstrips demand for it, prices go negative.
This situation, as strange as it might sound to an outsider, is actually not that uncommon in the energy market.
“Negative prices are happening more and more often, up to 30 days a year,” says energy entrepreneur and head of Volt Energy André Jurres. “Both nuclear power and wind are not flexible. The nuclear plants are too expensive to turn off,” he said.
Mr Jurres hopes that this fall in the price of electricity will cause the Belgian authorities to react effectively. “It must be a signal to the government that there is an urgent need to identify alternatives to the current system. For instance, we need more flexible gas plants,” he said.
Hydrogen production on a large scale could also be a solution, according to Mr. Jurres, as well as the development of more sophisticated wind turbine technologies. He also sees many advantages in collaborating with the Netherlands, both in the construction of wind farms in the North Sea and in the production of hydrogen.