Electricity price goes negative

A British utility company this weekend will actually pay some of its residential consumers to use electricity.

Negative electricity prices often show up in wholesale power markets. A big electricity user like a factory or a steel production plant is then paid to consume more power. Having too much power on the grid could lead to damaged equipment or even blackouts.

This could be seen at work on Friday when power prices reached as low as minus £70 pounds per megawatt-hour. This is enough electricity to light up several hundred homes for an hour. Demand data can be found at Drax Electric Insights, a website that tracks power statistics.

This below-zero price environment is allowing at least one power retailer called Octopus Energy to offer to pay some of its customers 2 – 5 pence per kilowatt hour for electricity they consume in periods of slack demand.

We are starting to see more and more customers asking about Octopus Energy and their “Agile” offering. With solar PV and a battery storage system a customer gets all their electricity for free (solar and battery) or at the reduced off peak rate by making smart use of the battery. When Octopus then inform the customer of plunge prices (below zero) the battery can then be set to import from the grid giving the customer additional income. Alternatively the customer can charge the car, heat their hot water or, as one customer of ours in Weston-super-Mare does, heat the hot tub till there is steam coming off it.

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