Firms get paid for using electricity as wholesale prices in negative territory

A NUMBER of companies were effectively paid for using electricity last month, when for the first time wholesale electricity prices fell into negative territory.

Since the creation of the all-island single electricity market in 2007, wholesale market prices for electricity have been set on a half-hourly basis. One of those half-hour periods — on the night of September 21 — saw a once-off drop into negative territory in prices; with the wholesale costs being measured, briefly, at minus €88 per MWh (megawatt hours).

This meant that certain commercial electricity users benefited from a payout, depending on their energy usage at the specific time. The benefit would also have only been seen by customers of independent business-to-business energy supplier VAYU — as it is the only supplier to include the prospect of negative wholesale price movements into its customer price plan.

That price plan option, according to VAYU’s head of regulation Bryan Hennessy, “was precisely to exploit low and, in this case, negative wholesale market prices”.

While the negative price shift will have a nominal effect on customers (payments in the hundreds of euro rather than anything higher), it is the first time negative pricing has occurred and it could happen more often; which will put greater emphasis on how well businesses manage their energy consumption. Energy costs, for business, have been consistently identified as a critical issue for Irish competitiveness.

However, suppliers — including the ESB, Energia, Northern Ireland Electricity and Airtricity — also benefited from the price erosion last month.

Last month’s price drop is thought to have been down to a combination of lower-than-anticipated customer demand and a higher than normal wind energy generation at the time.