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Germany's solar energy surplus outpaces demand, drastically lowering energy prices
The price drop is adversely affecting the profitability of solar power producers

Germany's solar energy surplus outpaces demand, drastically lowering energy prices

May 25, 2024
05:21 pm

What's the story

Germany's solar power production has exceeded consumer demand, leading to a significant decrease in energy prices, affecting producers' profitability and slowing down the expansion of solar energy. As per a note from SEB Research, solar producers have taken an 87% price cut during production hours in the last 10 days. In fact, prices have slid below zero during peak production hours. On average, the price received was €9.1 per MWh, far below €70.6 during non-solar hours.

Information

Cause behind the energy price reduction

The steep drop in energy prices is attributed to Germany's substantial increase in solar power capacity last year, installing a record 14,280MW of solar power capacity, nearly double compared to the previous year.

Energy surplus

California experiences similar issues

The problem of solar power surplus and its impact on energy prices is not unique to Germany. California has also faced similar challenges due to an excess of solar power, which has slowed down the installation of solar panels and hindered progress toward a carbon-neutral future. In response, California lawmakers have reduced payments to solar producers and allowed the state grid operator to sell its excess energy to neighboring states.

Long-term solution

Energy storage solutions for solar power surplus

The proposed long-term solution to the issue of solar power surplus is the installation of energy storage solutions. These systems can store excess solar energy for use during cloudy days and evenings when power demand is historically at its highest. Until such solutions are implemented, states with an excess of solar power will have to navigate fluctuating energy prices.