Cornwall Insight Ireland has commented on negative wholesale prices in the Irish Single Electricity Market (SEM) and what this might mean for the energy industry.
On 5 April, the SEM experienced a negative day-ahead trading price for almost the whole day. The above graph shows the day-ahead market starting at -€6.0/MWh, before falling as low as -€14.5/MWh at 2:00 pm. Overall, the day saw 20 of the hourly settlement periods out-turn negative.
Similar movements were observed in the intraday 1 market. These saw intraday prices fall as low as -€16.6/MWh at 2:00 pm. A total of 36 of the day’s half-hourly settlement periods were negative on the day. This led to both markets having a negative average on Sunday for the first time, at -€2.5/MWh for day-ahead power, and -€4.6/MWh for the intraday 1 market.
James Goldsmith, senior consultant at Cornwall Insight Ireland, said, “Demand levels in Ireland are still trending down due to Covid-19 restrictions. The sunny weather we have experienced will have only exacerbated the impact of low demand pushing day-ahead prices lower.
“Negative day-ahead prices are usually associated with overnight periods when large plant ramp-up to be on for the morning peak. This ramping up can drive prices to zero or below as they attempt to make that money back during the day. Ultimately the negative prices mean that the industry was paying people to take power.
“The question that instantly arises when an event of this nature occurs is whether this will become the new normal when there are even more renewables on the system. The answer is a mixed one.
“One thing is for certain though, a summer of low gas prices leading to low electricity prices, coupled with negative pricing on high wind days, may see some generators struggling for cashflow come August.”