An unpredictable combination of factors on the electricity markets led to a prolonged period of negative electricity prices over the Spring Bank Holiday weekend. Those consumers with flexible supply contracts enjoyed negative commodity prices for most of Saturday and again on the Sunday morning, hitting a low of minus £38.80/MWh on the Saturday afternoon. Then, prices rose swiftly to a peak of (plus) £43.22 at teatime on Sunday, before resuming their typical daily profile as if nothing had happened.
What caused this, then? Well, there was very low demand caused by a combination of the holiday weekend, the lockdown, the fine weather; the latter also led to high solar generation, during what we now know to have been the sunniest May on record. However, accompanying all this were also strong winds, which are far less predictable. The gusts blew from late on Friday until the Sunday lunchtime, and the resulting generation flooded the grid. This caused some generators to be ordered to switch off, under the new Optional Downward Flexibility Management (ODFM) service arrangement.
Prices tumbled because solar and wind power are “free”. Good news for consumers; bad news for generators, including glass growers with Combined Heat & Power units. But the financial support of the Feed-In Tariff or Renewable Obligation Certificates continues, persuading many to continue generating until that income is swallowed by the losses from negative market prices.
Generators now have a further calculation to make, whether it is worth signing up to respond to ODFM calls to cease generating. This is a balance of the income lost and any costs incurred (e.g. buying in alternative sources of power or CO2) against the ODFM compensation, which must cover the losses to make it worthwhile to join the new scheme.
If you are interested in joining the ODFM scheme give the team a call on 024 7669 8899.