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Twin peaks?The high summer HUPX prices and the potential price effects of higher PV penetration in Hungary - policy briefPublished: 23 of November, 2017

For the second time this year after January’s wholesale electricity prices rose to unexpected heights they did so again in late July/early August when hourly day ahead prices went up above 100 €/MWh many times in the most critical week, while German wholesale prices remained near 40 €/MWh in the same period.

This can be largely attributed to a confluence of high demand, a few days’ reduction of Austrian import capacities, the protracted draught period in the Balkans and the scheduled maintenance of several power plants in the region (including some blocks of Paks nuclear and Mátra lignite power plants).

While the frequency of extreme price spikes has not reached the critical threshold to induce new private investments according to market participants, it can be enough to facilitate investment into existing power plants for extended operation.

As a result of increasing PV penetration, the highest prices on the German market moved from the middle of the day to the morning and late afternoon hours. The result is a new price curve with two peaks instead of one.

Different levels of PV penetration in Hungary were modelled in case of the highest priced summer day to test the price effect: the addition of 600 MW resulted in a reduction of some 20 €/MWh during midday, 1000 MW brought 40 €/MWh reduction, and with 2000 MW penetration Hungarian prices fall to the level of the German prices in the middle of the day.

At the end of 2016 the Hungarian Energy and Public Utility Regulatory Authority (HEPURA) received PV licence applications for around 2000 MW capacity which could significantly reduce summer prices and flatten price spikes. This can beckon a new era of business models for both traders and power plants.

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The publication was supported by the REKK Foundation.