During Summer 2018, Germany witnessed another season of increased renewable power generation. German solar output was at 34 terawatt-hours (TWh), up 5 TWh or 17 percent compared to last summer. German wind output, while still below the market’s Summer 2017 average, will surpass it by 1.5 TWh or 4 percent following the anticipated increase in wind output.
The wind output on Wednesday, 26 September is expected to average 18.6 gigawatts (GW), up 11.1 GW, and will peak at 21.8 GW. Spot power prices are forecast to plunge as generation jumps. On the morning of Tuesday 25 September, Genscape analysts saw Day-Ahead (DA) power prices in Germany opened at EUR 54.25/megawatt-hours (MWh), which is more than 8 EUR less than the 24 September settlement at EUR 62.34/MWh. This serves as a strong reminder of wind’s load factor volatility, which is especially prominent during the upcoming winter season.
Germany has grand plans for wind generation and will increase capacity installations to meet its 2050 targets. In the last four years alone, 20 GW were added. The total wind park capacity is expected to be 60 GW by year-end.
In the meantime, 2 GW of solar capacity were added in Germany this year with the total capacity expected to reach 46 GW. Renewable generation pushed gas plant generation to off-peak hours this summer. With coal coming in first in the merit-order (despite rising Co2 prices), gas-fired plants were out of the money during longer, sunnier days.
Gas prices are currently firm mainly due to increased demand for storage injections (ahead of the winter) and a supply glut coming from the east. Over the past several weeks Russia delivered less gas than nominated, and the Asia-Pacific region is taking away all the available LNG, causing the spark spread to go deeply out-of-the-money and improving the dark spread. The spread between darks and sparks was well above EUR 10/MWh this summer.
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