Wholesale power prices plunged to record lows yesterday as traders braced themselves for a glut of wind generation in the early hours of this morning (7 June).
For the first time ever negative prices were seen in the half hour day-ahead auction after high wind output was forecast to coincide with the nightly lull in demand.
The negative prices covered the three delivery periods from 2am to 3.30am and reached a nadir of minus £1.43/MWh.
There was also a record low in the main day-ahead auction, with power prices dropping to just £1.57/MWh for delivery between 3am to 4am. They stayed below £10/MWh for five consecutive hours of delivery.
In the balancing market, prices remained negative for 1.30am through to 6am, falling to minus £24/MWh for one half hour delivery period.
Jamie Stewart, power editor at price reporting firm ICIS, told Utility Week: “It is highly unusual for the UK to see negative power pricing, but looking ahead to this summer, it is all but certain to become far more common. Paying others to consume what you produce will become a new occasional reality.”
Stewart said the negative prices were not only the result of high winds but also the inability of some large thermal plants, nuclear power stations in particular, to ramp down their output easily: “In the early hours of the morning, there is little demand: all that supply with nowhere to go.”
He continued: “What is most surprising is that this occurred on a weekday – albeit the small hours – as opposed to the weekend. The UK can expect to see more negative pricing this summer, but I would expect this to be most common on blustery but sunny weekend afternoons, when industrial demand is very low but wind and solar power combined potentially very high.”
Earlier this year National Grid launched its new demand turn-up service to help deal with surplus renewable generation following a trial in 2016.