ENCA are running a piece about electricity markets in Europe, and how, in areas with lots of solar and wind, the price can actually get negative at certain times of the day. This, as I understand it, means that the consumer is getting paid to consume.
Here’s the URL Renewables overproduction turns electricity prices negative - eNCA
But honestly, this wheeling and dealing with electricity that may or may not be generated is doing my head in: "Prices turn negative on the spot wholesale electricity market when production is strong while demand is weak.
“Around a fifth of the total is traded on this market, where electricity is bought for the following day.”
So there’s a market where they are buying electricity that hasn’t been generated yet but, their stats tell them, will be required tomorrow. Presumably weather forecasts are part of their modelling, along with tea cup reading and the divining of the entrails of a recently sacrificed beast.
OK… grumpy old me is getting confused by a world he no longer understands. But if the price is negative then instead of buying electricity for tomorrow, you are getting money for taking electriticy off of somebody’s hands. In such a scenario, the trade becomes the main point of the business, and actually supplying electricity to homes and businesses is secondary.
If they stored it in batteries and then sold it the next day or later the same day, then that’s something a body can get their head around. But this spot market stuff… This is what brings down banks.
Mind you, if lots of folks are working at home, then when the price goes negative you charge up the EV and run the dishwasher and the washing machine.
It is called “day-ahead pricing”, and they do it precisely so people can plan. You can literally make money from storing electricity in a battery, and sell it again later (arbitrage, in other words). That is precisely what they want you to do…
There are restrictions in some markets. For example, in Germany you may be restricted from selling energy back to the grid if that energy was bought from the grid earlier. This has to do with a complex relationship between suppliers, of which you can have more than one, and because there are ethical issues with buying energy that may have a coal component, storing it in the battery, and then selling it back later as if it is green.
In any case, there is something important to note about negative pricing: Tax is always for your account. When the price goes negative, the VAT is still charged to you and not to the buyer (the grid). That means you are only really paid once the price goes more negative than the taxes. So there is a bit of a dead zone in the middle where people simply close the taps. It acts a bit like the “spread” in other markets, which prevents “micro trading” or scalping.
The mechanics makes sense though. When there is a surplus like this, it is always because of too much renewables. It is never because someone is sending a coal plant a little too hard. So you are being paid to take green energy off the grid and use later. You are doing a good thing, and being compensated for it.
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I think it’s also worth mentioning that Victron does accommodate for that in a new “Dynamic ESS” feature Dynamic ESS - manual [Victron Energy]. You’ll see some mathy math in there is also accommodated:
Dynamic prices
Each country and provider uses their own formula for pricing. As the system grows, we will have more and more pre-filled out formula’s to select from, but you may need to adjust or fill out your own formula.
Unfortunately getting the buy and sell formulas right isn’t always straightforward. As all calculations, on when to buy and sell from the grid, are based on the formulas, getting it right is important. Most of the details of your formulas are located somewhere in the contract you signed with your provider. Quite often these contracts are not the most clear documents to read and dissect. We can give you some general rules and show you what other users have filled out as their formula. With these instructions, you should be able to approximate the actual price you are paying and receiving for your energy.
Generalised over countries and providers a formula typically something like: *(p+0.02+0.13)1.21. It this example it breaks down to:
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p - the dynamic price / kWh
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€ 0.02 - energy provider profit share
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€ 0.13 - DSO working price + contributions/levy/transportation fees
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21% - tax
The sell price formula looks often identical and in common cases looks something like (*p-0.02+0.13)1.21. So the energy provider profit share works the other way around.
If the provider takes a 15 % percentage of the day ahead buy price and the taxes are 6%, the formula becomes: ( p * 1.15 ) * 1.06. This is a bit weird, because in case of negative buy prices, the provider is going to pay you extra for all of the energy. Knowing providers, this is quite unlikely. So the more plausible formula becomes: (p + abs(p * 0.15)) * 1.06, which makes sure that the provider takes its share, even when the prices are negative. Also note that, if you don’t use euro’s, you can set the sites currency in the general settings for your site.
You can also get some ideas from this issue.
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A mate of mine in Bristol deals with a specific provider because they only sell electricity from renewable sources.
But he is fed by the same grid as everybody else, so the best he can hope for, really, is that if he takes 15kWh out of the grid on a day then his supplier has put 15kWh in.
So my mate doesn’t want his supplier buying from a coal fired source, storing it in batteries, then feeding it in and selling it as green.
Does this restriction then only apply to actual suppliers? If he stores some of that 15kWh in a battery and then feeds it back in, does it make a difference? The guys you buy from need to be audited, not the guy with a battery in his basement.
The problem is, I think, current/existing stations have/had big capital requirements upfront.
You need to split that, methinks, and THAT is the problem today.
You need:
Electricity generation that does not involve immense (coal/nuclear) stations.
Electricity generation that that is very flexible.
Distribution of said electricity, the fixed cost.
I guess this why they have a rule in the UK that you can only sell back to whoever you bought from in the first place.
In my friend’s case, he caused 15kWh of green power to enter the grid, and he can only sell back to the vendor of that green power. Vendors cannot become more green by buying something stored in somebody’s battery. The power they buy back from you has the same mix of sources as what they sold you.