Storm Hans has temporarily caused electricity prices to be low, even negative, during the week. The recent rainfall has also created promising conditions for cheaper electricity this winter, compared to last year.
– The water reservoir is being refilled, says Alejandro Egüez, analyst at the Energy Market Inspectorate.
During the week, electricity prices have been at unusually low levels as a result of the storm Hans, which brought strong wind and heavy rain, while the demand for electricity was lower than usual. On Tuesday, electricity prices were even negative.
– We received negative prices throughout the country, all day and during all hours. We have not experienced that before, it is exceptional, says Alejandro Egüez, analyst at the Energy Market Inspection.
According to Alejandro Egüez, the reason why electricity prices become negative has to do with the fact that there are both technical limitations and costs for turning off, for example, the wind turbines in a wind power plant. Even nuclear power can have large start-up and stop-down costs.
– Unlike other raw materials, electricity must be used directly when it is produced. When demand is low and at the same time a lot of electricity is produced at the same time, it is sometimes more profitable for the producers not to shut down the reactor or the turbine, says Alejandro Egüez.
Hans has filled the water reservoir
According to Alejandro Egüez, what effect the storm Hans may have on electricity prices in the longer term is not easy to determine because several factors come into play, but the heavy rain has created the conditions for lower electricity prices this winter.
– The water reservoir is filled. When it comes to wind, it is not possible to store, but at the same time you can think that it is a good signal for the market to invest in battery facilities in the future where you can store surpluses from wind.
However, it is not a matter of course that heavy rain equals better conditions for electricity production.
Parts of Sweden and above all Norway have been affected by floods as a result of the storm Hans. If water reservoirs overflow, it can instead have the opposite effect on electricity prices.
– The turbines that drive hydropower plants can handle a certain amount of water. If the pressure is too hard, the operators have to switch off the machines instead, says Alejandro Egüez.