Power and Energy Generation

Negative energy pricing

Negative energy pricing
Updated on Thursday 27 August 2020, 1:21 PM

1 Minute Read

One of the consequences of the increase in renewable generation on the electricity system has been the growth in negative electricity prices.

This is because of the unpredictable nature of wind generation (the majority of renewable electricity is wind generated), coupled with a significant drop in businesses energy use due to the current UK lockdown.

So, if prices occasionally enter negative territory, will I see a reduction or credit on my bill?

Unfortunately, not.

Although customer demand is low at the moment and, at selected times of the day, wholesale energy prices become negative. Wind generators have financial support mechanisms that need to be compensated should they be asked to reduce or temporary stop generating due to low demand.

This cost is borne by the consumer.

For businesses on fixed priced agreements, this will have no impact on charges because the energy supplier has guaranteed the rates for the duration of the contract.

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