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Negative power prices

Negative power prices

Solar and wind power sources, are growing in importance in the energy matrices of the vast majority of countries, A new phenomenon has emerged: supply surpassing market demand!

The result, in countries that have taken the lead in renewable, has been the emergence of negative power prices.

For most power contracting customers this matters little - in principle - as they are not exposed to spot prices.

But ... a supply vulnerability arises. The (financial) account for the power suppliers becomes red!. This because spot prices (negative) do not result from a reduction of their costs but from the supply/ demand balance.

Will Brazil deal with this in advance or would it prefer (as is our tradition) to wait for the problem to occur and then see what to do?

Rafael Herzberg's picture

Thank Rafael for the Post!

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Richard Brooks's picture
Richard Brooks on Oct 5, 2019 3:21 pm GMT

Negative LMP's also occur in New England when there is excess generation online that is needed to meet demand. The current floor price is -150 dollars, which means a generator could be paying $150 for each MWh of energy produced during these "excess gen" periods. As DER implementations continue to accelerate, especially battery installations, I would expect to see more of these "generator pays for the right to produce energy" events. Thanks for raising this important topic for discussion, it's one of the "big changes" that is occuring during the phase transition.

Bob Meinetz's picture
Bob Meinetz on Oct 6, 2019 2:23 pm GMT

Richard, that means NE-ISO ratepayers are ultimately paying up to $.15/kWh more at those times. Any idea what the total liability billed to ratepayers was last year?

Richard Brooks's picture
Richard Brooks on Oct 6, 2019 7:48 pm GMT

Bob, negative prices means the generators pay to produce energy and this "payment" reduces consumer cost. ISO-NE's settlement system algorithm handles this offset.

Dr. Amal Khashab's picture
Dr. Amal Khashab on Oct 5, 2019 9:33 pm GMT

I prefer to wait . It will be a common trend in renewable resources. I read an article about new wind auction in England , which mandate provider to pay back the difference between contracted and spotmarket prices on montly bases. 

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