Hungarian electricity market will face negative prices?

In the last couple of years, Hungary has been experiencing an explosion of solar power plants. This will lead to a serious supply of energy. However, if the demand does not keep pace with the supply, it is possible that in 3-5 years, we will be experiencing negative prices.

As Portfolio writes, the huge solar power plant expansion started two years ago in Hungary. Now, the total installed capacity has exceeded 5,000 megawatts. The requests waiting to be judged would provide almost 5,000 more megawatts. Gergő Batta, Deputy CEO for Operations at MAVIR, has expressed his thoughts and feelings about the possible future. Batta thinks that it will be very important to see how many of the requests will eventually result in actual projects. Although many of them are on a business basis, not based on subsidies.

Sustainability of solar power

Solar power is a sustainable source of energy, as it is a form of renewable energy. However, according to Batta, it is still unsure if it will be sustainable financially and technologically as well. If a huge difference in supply and demand is realised, then the prices will start decreasing. We can already see the prices going down, but this process will be even more prominent. Portfolio writes that the German power exchange recently experienced a price of minus EUR 500 per MWh on a weekend day when the industrial demand was lower.

The demand might have been lower, but the strong winds and sunshine provided a high supply. It is very clear to see in Europe that the various production waves of renewable energy are dragging wholesale power prices into negative and positive territory too. Batta also said about the imbalance that in 3-5 years, it would be possible that negative prices will occur from 9 AM to 4 PM from spring to autumn when the sun is shining.

Further research and innovation

In this system, power plants will not bring any profit. During negative prices, providers would have to pay to sell electricity. Providers would only survive if they could finance and balance these losses from other sources. For example, a market for systemic services, where different energy products could be sold. However, this market change will inspire further research and innovation programmes. For example, a solution has to be worked out for storing the energy. If the prices are negative, it is worth keeping it and storing it somehow rather than having to pay to sell it. When the prices go positive again, providers could sell energy for a higher price.