Last spring, negative electricity prices occurred in Shandong Province for approximately one-third of the total time.
The surge in renewable energy generation during spring, coupled with weak demand, led to the emergence of negative prices. This dynamic, often described as a 'duck curve,' has intensified price volatility, posing challenges to the economic viability of solar photovoltaic (PV) projects while simultaneously creating favorable conditions for energy storage systems.
In 2025, Shandong experienced negative electricity prices for a total of 1,330 hours, with nearly half of those hours occurring during the spring months. The primary drivers for this seasonal concentration were sluggish power demand and a significant increase in output from solar and wind power sources.
Spring typically sees limited demand for heating and cooling, and the period includes several public holidays, contributing to softer electricity consumption. Concurrently, robust wind power generation tends to elevate power supply levels throughout the day. Consequently, from March to May 2025, renewable energy generation increased by 27% compared to the previous three-month period, while electricity demand fell by 12%, exacerbating the seasonal power surplus.
The situation reversed in the summer as cooling demand increased, leading to a 31% rebound in power consumption. This helped alleviate the surplus and corrected the supply-demand imbalance observed in spring.
As one of China's pilot provinces for a spot electricity market, Shandong's intraday price fluctuations now more accurately reflect its real-time supply and demand conditions. Prices typically drop to their lowest point around midday when demand is off-peak and solar PV generation is at its maximum. Conversely, prices surge in the evening as solar output declines and electricity demand rises.
This 'duck curve' pattern, also observed in other regions with high solar penetration like California and Spain, has become evident in Shandong. Analysis suggests that if the growth rate of renewable energy penetration in the coming years outpaces improvements in grid flexibility, the duration of negative electricity price periods in Shandong is likely to increase further.
While the increasing frequency of negative prices can reduce revenue for solar PV generators, it creates more arbitrage opportunities for large-scale battery energy storage systems.
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