Analysis of day-ahead (SDAC) markets

European Price Dynamics

In April, the European electricity market observed significantly lower average day-ahead electricity prices hovering around €58/MWh/h compared to the previous month. This pattern was predominantly influenced by a surge in renewable generation, while high prices occurred during periods of low renewable generation and high demand. This highlights the high price volatility due to a lack of flexibility in power systems.

Figure 1. Europe's electricity price trends. 

Market integration across Europe

The trend of price convergence saw a decline across Capacity Calculation Regions (CCRs), with the Core region prices below €10/MWh/h for only  ~18% of the time throughout April. The total exchange of electricity remains relatively similar across SDAC, with only a notable switch in net positions between Austria and Germany compared to last month. This resulted in Germany switching to a net importer of electricity, influenced by a surge in hydro production in Austria and increased solar generation in the Netherlands.

Figure 2. Peak at switching net positions

Impact of Renewable generation

April showcased a notable impact of renewable energy sources on electricity markets. Increased solar and wind generation led to instances of negative prices across Europe. In Iberia, the effect was coupled with increased hydro-reservoir levels in Spain, therefore experiencing the highest number of hours with negative prices. It would be interesting to continue analyzing the impact of renewables with warmer weather on the horizon and low electricity demand, and if they continue to showcase impact on the price convergence compared to market constraints.

Figure 3. Negative prices were witnessed across Europe in April