| Europe Negativity
Studies led by Čerpinska et al have examined electricity generation in Lithuania, Italy, Iceland and Austria, focusing on the new phenomenon of negative electricity prices and how it highlights the growing importance of energy storage. ‘In a nutshell,’ the authors wrote, ‘negative prices occur when there is excess generation from renewable sources and low demand in the energy market. As a result, negative prices happen mainly when it is more costly to stop a generation unit than to keep it running or because the generation side has been given the wrong incentives through contracts or feed-in tariffs.’ Negative prices, they go on to add, are an indicator of the growing importance of energy storage solutions to manage excess generation. Investing in solutions and technologies to improve system flexibility and storage is the way forwards, with the flexible operation of hydropower plants stated as being crucial for the EU in terms of supply security and grid stability. In their research Čerpinska et al addressed four main aspects for each of the EU countries. These were: The importance of hydropower in the country’s energy system (share of all sources and renewables). The relationship between hydropower and price dynamics.
Policy initiatives.
Challenges and opportunities for hydropower deployment. In Lithuania hydropower and pumped storage accounts for 17.1% of all electricity sources and 22.2% of renewables. Negative electricity prices first occurred in the Lithuanian power market in 2020 and became ‘the rule’ in 2023. A year, which the authors describe as being: ‘characterised by a remarkable increase in electricity generation from photovoltaic and wind power plants, while electricity generation from hydropower remained at the same level.’ With the Lithuanian Ministry of Energy estimating the installed capacity of wind power plants will continue to increase, this will provide ‘the perfect backdrop for destabilised grid conditions and negative prices in the electricity market’. The authors go on to cite 28 May 2023 as an
example of the above. On that day solar power generation peaked at 499MW, wind power peaked at 174MW, while the country’s sole pumped storage power plant operated in pumping mode, and pure hydropower plants generated 24 MW. And this all led to negative prices on the market. The available capacity of pumped storage hydropower, the authors warn, will not prevent the increase in the cases of negative prices in the country’s electricity market if this trend continues. Moving on to looking at Italy, hydropower has
‘created a solid foundation’ for the country over the past two decades, according to Čerpinska et al. Contributing over 20GW to all renewable energy, hydropower is described as being Italy’s most important renewable source. And although photovoltaics has overtaken it in terms of electricity capacity since 2013, the energy generated by photovoltaics has never overtaken the energy generated by hydropower, the authors claim. Italy is also described as being a regional leader in the small hydropower sector and a global centre
for such research. The country still has considerable untapped potential with 3.5 GW of potential electricity capacity. However the main obstacles to the further development of small hydro include public opposition to projects in some parts of the country and the long approval periods. To accommodate for the increasing share of
renewable energies, owner of the Italian transmission grid TERNA wants to achieve a higher degree of grid flexibility. Proposing an increase in storage capacity of 22GW as a target for 2030 in Italy, in TERNA’s development plan, only 3.5GW of this will consist of pumped storage power plants and which corresponds to a doubling of current capacity. The Icelandic market has been described as ‘a compelling case study for the successful integration of renewable energy sources into a national energy grid’. With almost 100% of its electricity coming from renewable sources, Čerpinska et al say the country is ‘a global role model for sustainable energy practices’. Crucial to this success is hydropower, which forms the backbone of Icelandic electricity generation. Contributing to around 70% of the country’s power,
hydro’s important role ensures a reliable and constant supply of electricity, as well as contributing to the stability of electricity prices too. Unlike many other countries, as Iceland is not able
to trade electricity across international borders, it doesn’t experience negative electricity prices and can maintain a stable price environment for its consumers. The benefits of hydropower go beyond energy
production, the authors add, giving the examples of energy-intensive industries, such as aluminium production, which have been attracted to Iceland due to its cheap and reliable hydroelectricity. ‘Iceland’s energy market policies, with a strong emphasis on hydropower, have positioned the country as a leader in renewable energy. The effective use of hydropower resources has provided Iceland with a sustainable and economically advantageous energy solution. However,’ Čerpinska et al caution, ‘further efforts are needed to address environmental concerns and mitigate risks associated with climate change by continuing to innovate and adapt.’ And over in Austria, a country where its electricity generation has been based on hydropower for
Below: Liptovská Mara reservoir in Slovakia during drought in 2025. European hydropower has been hit by this lingering drought
Above: Kaprun hydropower dam in Salzburg Alps, Austria. Most of the country’s renewable energy mix was attributed to hydro in 2023
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