Low demand and a sunny weekend sent power prices plunging into negative figures on the day-ahead hourly market for the third time as generation hit a new record.
Yesterday (Sunday 5 April), saw electricity prices drop below -£66 as strong wind and solar generation came on the grid. This allowed platforms such as Octopus Agile to offer negative prices for five hours and a half hours.
The company said that while it wasn’t the highest negative pricing its seen, it was one of the longest periods of negative pricing.
This surge in renewable generation worked with low demand, following the closure of factories and workplaces due to the lockdown caused by the COVID-19 pandemic. Over the last few weeks this has seen the UK’s demand pattern change, with demand falling by 13% as of last Wednesday, according to Cornwall Insight.
James Brabben, wholesale manager at the analytics company, explained the negative day-ahead hourly prices for delivery on Sunday.
“Without precedent before December 2019, negative prices on the day-ahead hourly market have now occurred three times, in December 2019 and February and April 2020.
“There was a combination of very low transmission system demand levels, which fell well below National Grid forecasts, as well as exceptionally high renewables output which peaked at 69% of generation on Sunday afternoon, which was a new record.”
At 3.48pm on Sunday, renewables accounted for nearly 70% of the country's electricity demand, a new record according to Drax Electric Insights. This beats the previous 68% set on 17 August 2019.
A large part of the generation over the weekend was created by wind power, which has driven negative pricing in the past. Predominantly we’ve seen it during storms such as Storm Ciara in February, which saw wind generate 56% of the nation’s power.
While wind generation was strong over the weekend, providing almost 50% of demand, it was also partnered with strong solar generation too, meeting almost 23% of the UK's demand.
Conor Maher-McWilliams, head of flexibility at Kaluza, said that days like Sunday are “very encouraging to see” and will become increasingly common.
“The events of yesterday also highlighted the need for increased levels of flexibility and storage in a grid operating with an abundance of clean renewable energy. The system imbalance price clearly exhibited this, where an oversupply of wind energy drove the price negative in 18 half-hour periods.
“Residential flexibility and storage can play a key role in responding to this short term volatility to smooth out imbalance in supply and demand. On Sunday, Kaluza-connected V2G chargers optimised around the system price, charging their connected vehicles in the early afternoon and overnight when prices went negative.”
As the penetration of renewables on the UK grid continues to grow, with government figures showing renewables produced nearly 37% of the UK’s power in 2019, negative pricing events will become more common.
"Negative pricing is definitely the new normal in the short/medium term, in the short term this will persist until demand recovers from Covid-19 effects," explained Rob Sherwood head of trading and analytics at Limejump.
"In the medium term it will still persist until the majority of sites run out of their subsidies from the RO scheme."
EnAppSys director Phil Hewett added that the weekend was “basically a glimpse of the future".
Customers are increasingly benefiting from these periods, with those on tariffs like Octopus Agile able to charge electric vehicles for free.
While we’re not quite there yet, Hewett added “in the next couple of years, I think everybody will be looking at dispatching their car, based on the generation".
This will allow consumers to benefit from low cost, green energy at a domestic level in the next two or three years.