In this month's Market Watch, our experts Chitransh Lot and Reinhard Kaisinger assess key developments and trends in the electricity market. Focusing on the single day-ahead market coupling (SDAC),they provide insights into the pricing dynamics, net positions, and noteworthy shifts in various regions.
European Price Dynamics
In March, the European electricity market continues its downward trend: persistently low average day-ahead electricity prices hovering around €64/MWh. This pattern was predominantly influenced by lower demand and robust renewable generation. The month saw the resurgence of the negative prices in Core and the Nordic region. Moreover, the price spreads for Q1 remain lower than the previous year, indicating less volatility in the electricity prices.
Market integration across Europe
The trend of price convergence persists in Europe, with the Core region maintaining price differences below €10/MWh for approximately 40% of the time throughout March. Allocation constraints emerge as a significant impediment to enhanced price convergence, notably affecting bidding zones such as Italy-North and Poland. Italy-North consistently struggles with congested borders, resulting in elevated price spreads across its bidding zone borders for a considerable duration. Similarly, Poland's allocation constraint led to elevated prices and widened spreads across its bidding zone borders.
Impact of Renewable Generation
Renewable energy sources, particularly solar power, played a pivotal role in shaping market dynamics. The proliferation of large-scale solar generation facilities notably contributed to instances of negative prices, exemplified by occurrences in the Netherlands. This phenomenon was underscored by the emergence of ‘duck curve' patterns, reflecting the challenges of balancing supply and demand in the face of high renewable energy generation.
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Industry Topics
Market Integration, SDAC