The German BAFA subsidy is an attractive opportunity for companies to receive financial support for energy-efficient measures. In this article, we answer the most important questions about BAFA Module 3 subsidy so that you can make the most of the funding opportunities.
The introduction of the solar package by the traffic light coalition marks another important step in the energy revolution. The goal is to install photovoltaic systems with an output of 200 gigawatts by 2030 and to increase the share of renewables in the power supply to at least 80 percent. According to Federal Minister Robert Habeck, the solar package is a “booster” that is intended to accelerate and reduce bureaucracy in the expansion of solar energy (BMWK press release, 2024). But with the increased supply of solar energy, electricity prices on short-term power exchanges could also fall drastically — even negative at certain points in time.
What are negative electricity prices?
Large power producers on power exchanges normally receive money for feeding electricity into the grid. However, in the event of negative electricity prices, they must pay money for it. Ordinary households that generate electricity through their own solar systems are not affected. But how do negative electricity prices arise? They arise when the supply of electricity exceeds the growth in demand and the additional supply cannot be exported. This often happens when volatile power generators such as wind and solar energy feed in a disproportionate amount of electricity. In the past, this happened, for example, on public holidays or during the COVID-19 pandemic, as little electricity was consumed. It is currently being discussed whether the solar package and the expansion of renewables will increasingly lead to negative electricity prices even below normal working weeks.
The origin of negative electricity prices
Negative electricity prices are a phenomenon that has been occurring since they were approved in 2008. At that time, they were also approved on the spot market at the request of market participants. The aim was, among other things, for conventional power plants to adapt more to the production of solar and wind energy. They should also provide an incentive for market participants to switch to more flexible energy consumption.
Who pays for negative electricity prices?
The costs of negative electricity prices are borne primarily by generation plants, which have to pay for their electricity in order to feed it into the grid. However, in order to compensate for this, they receive funding under the Renewable Energy Sources Act (EEG), the so-called market premium. The funding is ultimately also co-financed by end consumers through the EEG surcharge. However, in order to cover costs, funding has been limited to three consecutive hours since 2023. After these three hours, producers no longer receive a market premium. This could be a problem in the current situation.
The problem with negative electricity prices
In 2023, the highest number of negative hourly contracts on the power exchange to date were recorded at 301 (CHP, 2024) .As a result of the solar package and the increased expansion of renewable energies, the number is likely to continue to rise. Experts such as Christoph Bauer, Professor of Energy Economics at TU Darmstadt, expect a drastic increase (FRIDAY, 2024). As a result, costs for operators continue to rise. Various approaches are therefore suggested in expert circles:
- Control the supply of smaller PV systems and better adjust them to power consumption via smart meters
- Reduce or specifically manage the expansion of renewable energies
- Continue to expand storage capacities
- With flexible network charges Create incentives to use green electricity when it is increasingly available
- Increasing flexibility on the inside of producers and consumers
How can companies benefit from negative electricity prices?
Industry plays an important role here, as it currently consumes around 42% of Germany's electricity annually. Making their consumption more flexible would have a positive impact on the electricity market. At the same time, flexible industrial companies benefit and become winners of the current situation. If they adjust their consumption to generation, they can take advantage of negative electricity prices and Save up to 20% on energy costs. This is now possible without any intervention with the help of automated control by energy management systems such as flexOn.
Negative electricity prices are a complex phenomenon that results from the interplay of supply and demand on the electricity market. While they may pose challenges for some market players, they also offer opportunities for companies to reduce their electricity costs and benefit from flexible consumption processes.