Energy Arbitrage – Part 1: Spot Prices

Spot-price volatility

     Spot-market electricity prices are highly volatile—and this volatility is expected to increase further with the Czech market operator OTE’s transition to 15-minute trading intervals in June 2025. Hourly prices will still exist, but they’ll simply represent the arithmetic average of four consecutive 15-minute prices. This change offers new optimization opportunities but will also require more accurate forecasting and faster system response times. Another driver of rising volatility is the growing share of renewable energy sources in the grid. Below, we describe the current impact of this trend.

Daily and weekly price patterns

     The highest electricity prices typically occur during periods of peak demand and limited supply—commonly in the morning and evening hours. Conversely, the lowest prices are regularly observed on Sundays when overall electricity demand is at its lowest.

Looking at longer-term trends, the number of hours with negative prices, the range between maximum and minimum prices, and median price levels have all increased over time (excluding the atypical COVID year 2022). We expect the trend of increasing price volatility and more frequent negative-price hours to continue in the coming years. However, this will depend on several external factors that are beyond the scope of this article. For now, we focus on one major driver: solar radiation.

Impact of solar irradiance on spot prices

     We obtained hourly solar irradiance data (measured in W/m²) from the Czech Hydrometeorological Institute (CHMI) for two reference locations: Brno–Tuřany and Prague–Libuš. We then analyzed the correlation between these irradiance values and spot electricity prices.

In 2024, the absolute value of the Pearson correlation coefficient increased from 0.278 (2023) to 0.393—indicating a 41% strengthening of the relationship. This confirms a stronger negative linear dependency, meaning that electricity prices tend to fall as solar radiation increases. When we narrowed our analysis to only the hours during which solar production has the greatest impact (from 9:00 to 16:00 throughout the year), the correlation almost doubled. The price-solar dependency becomes significantly more pronounced during these peak solar generation hours.

What surprised us was that, in all cases, the correlation was consistently stronger in the Prague–Libuš location than in Brno–Tuřany. We will take a closer look at this interesting observation in one of our upcoming articles.

Arbitrage opportunities

     While the growing number of negative-price hours suggests opportunities for energy arbitrage, it’s important to understand that not every negative-price hour guarantees a profit. Several other factors come into play, such as battery specifications, operational constraints, and associated costs.

More on this in the next part…