Low and Negative Electricity Prices: a Threat or Incentive for Res Investments

Abstract

The global energy landscape has been significantly shaped by rising energy prices and the increasing demand for energy resources, driven by factors such as global warming. In this context, the role of renewable energy sources (RES) has become crucial in shaping the future of the energy sector. This paper explores the impact of low and negative electricity prices on the investment climate in renewable energy, focusing on both global trends and the specific case of Moldova. It analyzes the factors contributing to the overproduction of electricity from RES, such as high shares of variable generation, limited energy storage capacity, insufficient grid flexibility, and rigid tariff systems. The study examines the experience of European countries with record periods of negative electricity prices and discusses the risks and potential solutions for Moldova, a country undergoing rapid growth in its renewable energy capacities. The paper highlights the need for investments in energy storage technologies, flexible consumption mechanisms, and balancing systems, alongside the development of interconnection infrastructure to export surplus renewable energy. It concludes that while Moldova's risk of electricity overproduction remains relatively low, proactive measures and investments in energy infrastructure are essential to mitigate future challenges associated with negative electricity prices and to optimize the use of renewable energy sources. UDC: 330.322:620.91(478); JEL: Q42, Q43, Q47, Q48