(Bloomberg) -- Power prices in Europe swung in a €260 ($279) per megawatt-hour range at the weekend, almost triple the past year’s daily average, as a strong supply of wind dropped.

On Sunday, hourly prices in Germany — Europe’s benchmark power market — traded deep in negative territory as abundant supplies of renewable energy outstripped demand. But they surged again in an auction for Monday as wind generation plunged. 

This kind of volatility will only increase as Europe expands solar and wind capacity to meet strict climate targets. As intermittent sources take a larger slice of the power mix, the need for gas plants that can ramp up and down quickly as well as large-scale battery systems to store any surplus will also grow. At the moment, there isn’t enough of either. 

“Germany’s increasing need for flexibility is contributing to widening hourly day-ahead spreads,” said Sabrina Kernbichler, lead power analyst at Energy Aspects Ltd. The high startup costs for flexible gas plants helps push up those short-term prices, she said.  

At the same time, low demand on weekends in the spring and summer months as well as high solar generation combine to create more and more sub-zero prices. And as spring and early summer is prime-time for the technology, analysts at BloombergNEF expect that average monthly solar generation will rise to new highs in May and then again in June.

German hourly day-ahead power prices for Sunday dropped as low as €-65.06 per megawatt-hour at 2 p.m. For Monday, prices for 8 p.m. spiked as high as €204.57, the highest since December. By contrast, the difference between each day’s highest and lowest hourly prices has averaged €92 over the past year. 

Similar extremes were experienced across Europe, making it more difficult for countries to balance the grid. 

Looking ahead, Wednesday demand is lower than usual for a weekday as it is a public holiday across much of Europe. Forecasts show that solar generation could peak at 40,695 megawatts, just shy of the record 40,919 megawatts in May last year. German wind output is forecast to climb to more than 32,000 megawatts versus about 4,000 as of noon on Monday. 

Germany’s day-ahead auction for delivery Tuesday settled at €69.38 per megawatt-hour. In France, the equivalent contract settled at €58.89 per megawatt-hour.

(Adds day-ahead prices for Tuesday in final paragraph)

©2024 Bloomberg L.P.