Insights
While negative electricity prices may seem challenging for solar owners, there are several smart ways to deal with it.
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The price of electricity is determined by supply and demand — that is, how much is produced, and how much is consumed. At 12 noon every day there is an auction at the Nord Pool electricity exchange.
“Simply put, the power producers submit what price they are willing to sell the electricity for, and the price of the last kilowatt hour that covers the demand sets the price in the market. In this way, the market ensures that the most affordable power is the one that gets to produce first,” explains CFO Adrian Bergem of Sunday Power.
What are negative electricity prices?
Negative electricity prices occur when there is an abundance of unregulated electricity generation with almost zero in marginal cost, such as solar, wind and river power, while keeping demand low. This often occurs on hot days on weekends, or during the melt season when river power is at its highest and the water reservoirs fill.
Power producers may still choose to run their power plants despite negative prices due to various market mechanisms, such as pre-agreed fixed prices.
See also: What will electricity prices be in the future?
What does this mean for solar cell owners?
“For those who have solar cells on their roofs, negative electricity prices can seem paradoxical. When prices are negative, it means that in practice one has to pay to supply electricity to the grid. This can reduce the profitability of solar panels, especially during periods of high sun and low demand for electricity, Adrian says.
Fortunately, it is possible to solve this in a good way.
“By optimizing your production and consumption, you can still get the most out of your solar system during periods of negative prices.
What can you do to counteract negative electricity prices?
One solution to dealing with negative electricity prices is to reduce or shut down production from the photovoltaic system. This you can do with the help of inverters that support throttling.
Sunday Power's CTO, Håkon Trømborg, explains:
— By using automatic software, you don't have to keep track of electricity prices manually. Our proprietary software SundayOS can adjust output automatically based on electricity prices and building power consumption so you don't lose money when the price is negative. One should also take into account grid rent, as production at negative spot prices can often be profitable anyway due to saved grid rent. Often you save more than 20 öre/kWt in grid rent by using solar power instead of buying from the grid, so at prices just below 0 öre/kWt you don't have to do anything.
By using electricity when prices are lowest or negative, you can exploit the situation to your own advantage. This could be, for example, charging electric cars, heating water or running power-intensive appliances during periods of negative prices.
By storing the electricity when prices are low or negative, you can use it later when prices are higher, thus increasing profitability. For this, farm owners need battery and storage technology.
“When battery prices fall, you'll be able to optimize even more by saving free power for later use. Therefore, we closely monitor this market for our customers,” says Trømborg.
See also: The tech team at Sunday Power has developed an artificial intelligence that optimizes battery management
In summary:
While negative electricity prices may seem challenging for solar owners, there are several ways to deal with this. By optimizing your production and consumption, and considering investments in energy storage, you get the most out of your solar system.
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