Some time ago, the media reported that negative energy prices had appeared in Poland for the first time in history. The situation took place on Sunday, June 11, 2023, between 11:00 and 16:00. What are negative electricity prices? Where do they come from? And what does the phenomenon mean for prosumers?
Negative energy prices – when production exceeds demand
Negative energy prices can occur when there is increased production of electricity from renewable sources combined with low demand for energy. This usually happens on weekends or holidays, when electricity consumption drops. At the same time, it must be windy and sunny, which translates into higher RES efficiency.
In favorable weather conditions and low demand for energy, its production can be limited by cutting off some devices from the network or exporting it to neighboring markets. Another solution is rational demand management, i.e. paying energy consumers for additional consumption. The excess electricity produced can be used to produce hot water or charge heat storage. It can also be stored in energy banks.
Formally, negative energy prices may appear in Poland from 2019. This results from the provisions of the EU regulation, which excluded the possibility of introducing lower price limits. However, the phenomenon occurred only this year.
In other European markets, situations of this type have been occurring since 2007. In Germany alone, negative and zero prices were recorded for almost 300 hours this year. The lowest amount in 2023 was recorded in the Netherlands. On May 28, between 2:00 and 3:00 p.m., the price for energy was minus 400 EUR/MWh.
See also: Electricity storage in a nutshell
Do negative energy prices mean lower electricity bills?
No, negative prices on the wholesale market do not translate directly into prices on the retail market – in households and farms. This also applies to industrial customers.
How much we pay for electricity is the result of previously signed long-term contracts. It is on this basis that the rate is determined, in a shorter period the recipient pays for the use of 1 kWh (over a year or several years).
Prosumers remain vigilant
Negative energy prices for photovoltaic owners do not mean major changes for now. Those who settle on the net-metering principle can receive as much as 4/5 of what they actually produced throughout the year. On the other hand, producers using net-billing until the end of June settle according to the rates from the previous month (RCEm). This means that this group can potentially count on lower prices in July.
Interestingly, net-billing based on monthly prices will be mandatory until June 2024. Then, prosumers will switch to hourly prices. This means that surpluses sent back to the network will be settled according to dynamic - hourly tariffs. At the same time, it is expected that the phenomenon of negative energy prices will repeat itself. Does this mean that prosumers will lose out?
Self-consumption, i.e. using the energy produced for one's own needs, will undoubtedly gain in importance. Raising the level of self-consumption will bring a faster return on investment in a PV installation. At the same time, it will allow independence from fluctuations in electricity prices.
How to increase self-consumption? The solution is to store electricity in a special energy storage. The stored energy can be used when prices rise and thus save a lot of money.
Some inverters and power banks allow energy trading, which means additional profits for their owners in the future. An example are Miellec banks. By investing in a Miellec device, you are investing in energy stability and savings!
Negative energy prices – what does the future bring?
The phenomenon of energy production significantly exceeding current demand will occur more and more often. This results from the growing interest in renewable energy sources, mainly PV modules, and the occurrence of favorable weather conditions. This can lead to overloads in the power grid. The solution is to increase the flexibility of the grid by developing energy, heat and cooling storage infrastructure. The appearance of negative energy prices on the Polish market should be an impulse for investments in heat pumps and storage systems.
