Solar power reduces electricity trading prices by up to ten percent

By: BSW-Solar

Study shows that in 2011, overall savings on the European Power Exchange (EPEX) due to photovoltaics were as high as 840 million euros / at midday, solar power reduced prices by as much as 40 percent / Industrial power prices sink by around 0.15 cent per kilowatt-hour due to price reduction effect

Solar power reduces average trading prices on the European Power Exchange (EPEX) up to an average of 10% and by as much as 40% at midday. This is one of the conclusions reached by a short-term study carried out by the Institute for Future Energy Systems (IZES gGmbH), Saarbrücken, commissioned by BSW-Solar. In total, the price reduction effect for 2011 will amount to between 520 and 840 million euros – which corresponds to a price reduction of 4 to 6 euros per megawatt-hour.

"There is a lot of discussion about the costs of solar power", explains Carsten Körnig, Managing Director of BSW-Solar. "The IZES study shows that solar power is already having a positive effect on prices."

The reason for the price-reduction effect: Solar power is generated at peak demand periods – during the day, when market power prices are highest. The IZES study demonstrates that with increasing solar power capacity the price of peak demand power has fallen continually in the period 2007 to 2011 (see graph). Peak demand power is traded on the spot energy market of the European Power Exchange (EPEX) between the hours of 08.00 to 20.00. The spot market sets the price for the entire power trading market in Germany, including the derivatives market and OTC (over the counter) trading.

At the present time, the price-reduction effect primarily benefits wholesalers and large-scale power users who obtain their power on the spot market. Thus, current solar policies allow lucrative double dipping on the part of power-intensive industries. Firstly, they benefit from lower purchase prices on the power market, and secondly they gain significant exemption from EEG Apportionment payments (apportionment payments set down by the Renewable Energy Sources Act).

However, household consumers do not benefit from the price-reduction effects. In fact, the opposite is true: The calculation methodology for the EEG Apportionment actually results in higher prices for private consumers because they have to cover the differential costs between cheap, peak demand power and guaranteed feed-in remuneration. If the price-reduction effect of photovoltaics was factored into EEG Apportionment payments, it would result in a price reduction of 0.15 cents per kilowatt-hour for household consumers.

David Wedepohl
Bundesverband Solarwirtschaft e.V.
Friedrichstraße 78
10117 Berlin
Phone: 030 / 29 777 88 - 30

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