Too much of a good thing

LARGE parts of Europe have experienced a somewhat unusual development in the first half of this year in the electricity market: negative prices. The situation has come about due to the explosive growth of renewable energy (RE) generation, with solar being the main culprit in this case. At the same time, there has been a significant drop in energy demand. The mismatch between supply and demand has caused a record number of hours where electricity prices were zero or negative in wholesale markets in Germany, France, Spain, the Netherlands, Finland and southern Sweden, according to market data from the London Stock Exchange Group.

The reason this is happening is fairly easy to explain, which is why one has to wonder why the energy market didn't see it coming.