Negative electricity prices – the shape of things to come?
A few months ago, something quite unprecedented happened. On March 24th 2019, an atypical set of events led to the UK’s System Price for electricity to drop below zero to -£50 per MWh. There it remained for 6 hours, even going as low as -£70/MWh at one point.
On the day in question, many of us were enjoying our first taste of summer, relaxing in our gardens, reading the Sunday papers…
However, back at the National Grid, people were working hard to keep the lights on. The unusually sunny weather meant that generation from Solar PV (photovoltaic) was much higher than forecasted for the average weekend in March. At the same time, with most people outdoors basking in the sun instead of basking amongst their devices, electricity consumption was much lower than expected.
Despite this sounding like an ideal situation, the problem is, electricity cannot be stored in significant quantities. So, the supply from power stations and PV panels need to be continuously balanced with the demand from homes, businesses and industry. This is why we have a System Price; energy suppliers are charged for every unit of energy above what they predicted they would need, and the System Price reflects this balance in demand.
Due to the way energy has historically been produced (power stations), it has been quite a straightforward affair predicting how much electricity would be generated by them. This means the System Price is normally positive, allowing it to function as a penalty to energy suppliers who undercut their predictions, incentivising them to get their forecasts right.
However, with PV panels working overtime but demand less than usual, the System Price flipped negative. This meant it became advantageous to pay energy suppliers for additional consumption – the complete opposite to how energy pricing normally works!
Whilst end-users won’t see any discounts in their next bill due to this episode, this gives an indication of the shape of things to come.
Increasing volumes of renewables, like variable wind and hard-to-predict sun, increase the chance that generation will outstrip demand. As old and polluting power stations close, the range of options that National Grid has to redress this imbalance is narrowing. So, expect to see greater swings in the System Price as a result and more instances of negative pricing.
However, this is good news for drivers of Electric Vehicles (EVs) and strengthens the case for the deployment of innovative technologies like Vehicle-to-Grid (V2G). Whilst many EVs offer one-directional charging, V2G allows users to intelligently manage the charging and discharging of the battery, effectively turning your EV into a mobile, self-contained energy source. For example, an EV owner with V2G capabilities could have increased their charging rate in response to this pricing and been paid for the electricity stored, thus reducing the cost of running that vehicle. All while guaranteeing your EV is ready to be driven when you need it.
E-flex is a London-based innovation project that is designed to explore the possibilities of V2G in real-world situations. We are connecting 200 Electric Vehicles to a world-leading platform from Nuvve that allows EV owners to benefit from events like the one on March 24th when they would have been paid to charge their vehicles, thus reducing the costs associated with the ownership and operation of EVs.