Here in the Netherlands we have some energy companies offering dynamic tariffs. Basically it means that the price is high when the demand is high, and on contrary, the price is low when the demand is low. When the energy supply is greater than the demand the prices can become negative, I.e. -0.05 ct per Kwm
And the negative price is what amazes me. It means you earn money by using electricity. So in theory I can built a giant hamster wheel which will be powered by electricity only when the price is negative, and it will make profit. Free money for doing nothing
Does anybody knows how negative energy prices work?
In: 3
To keep the grid stable, energy production and demand have to be matched. Some forms of energy production can be switched on and off at will, while others are very inflexible and have to be gradually spun up and down, or there might not be the necessary infrastructure to switch them off because it’s needed so rarely. And then on top of that you have all the business stuff – in most countries, there isn’t a single monolith in charge of all this: instead there are a whole host of different private companies involved in producing, consuming and distributing energy, which have all kinds of contracts and regulations they have to follow, and all kinds of financial incentives and penalties.
When demand is very low, the producers that can switch off their production do so, but for some it can be worth paying other companies to take their electricity off them. If this happened a lot, then obviously it would be possible to profit from it. For example, you could set up some kind of energy-hungry business, like an aluminium smelter, that only runs when electricity is free or negative. In fact, there are already plenty of businesses like that which only operate when electricity is cheap. In most countries, negative prices are a pretty rare event, which only happen when those businesses are failing to soak up all the production.
Latest Answers