Will VPPs become a mandatory component of clean energy systems?

Recent developments in the European energy system indicate a significant decrease in coal- and gas-based power generation and a concomitant increase in renewable energy sources. This aligns closely with decarbonization initiatives and is cause for celebration. However, certain challenges associated with energy systems that comprise a large share of wind and solar energy have already become apparent in the market. According to data published by EnergyScan, there was a reduction of 117 TWh in fossil power generation across the six largest European economies in 2023 compared to 2022, representing approximately 8% of total production. At the same time the increase in hydro, wind, and solar production accounted for 63 TWh, or 4.5%. However, this shift has led to a significant increase in the number of hours with negative power prices in these countries. For instance, in Germany, the number of hours per year with negative prices grew from around 80 in 2022 to over 300 in 2023. Negative prices indicate inefficiencies in the system resulting from overproduction by renewables during certain periods and a lack of flexibility in the system to absorb this excess. It’s worth noting that such a significant increase in hours with negative prices occurs in an… continue reading

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