Negative electricity prices under consideration – Opportunity for large industrial consumers in particular

Serbia is considering introducing the possibility of negative electricity prices, which is one of the key innovations envisaged in the proposal for amendments to the Electricity Market Rules. The aim of the proposal, on which a public debate has just ended, is to align the domestic market with practices that already exist in Europe and to adapt the system to the growing share of renewable energy sources, according to the explanation.

For decades, the principle that electricity is cheapest at night and most expensive during the day has prevailed in the energy sector. However, with the increasing number of power plants using renewable energy sources (RES), this logic is changing fundamentally, explains Professor Nikola Rajakovic from the Faculty of Electrical Engineering in Belgrade in an interview with Nedeljnik.

When production from renewable sources, which depends on weather conditions, exceeds current consumer demand, a surplus of energy is created in the network. In order to maintain balance and avoid technically complex and expensive shutdowns of power plants, it is sometimes more profitable for producers to offer energy at a negative price - that is, to pay someone to consume the excess.

– In order not to shut down the power plant, destroy equipment or make excessive adjustments to the system, the operator says: let’s pay a little so that someone else can take over that energy – Rajakovic specifies.

The amendments to the Electricity Market Rules officially open up the regulatory space for this practice for the first time. The proposed text states that “the settlement price for a balance deviation is a price that can be positive, equal to zero or negative.”

This means that deviations between planned and actual consumption can also be calculated at a negative price. A lower limit has also been defined, so it is proposed that the price “cannot be less than -15,000 €/MWh.”

If adopted, these changes will most affect large industrial consumers and future owners of energy storage systems, which will be able to take advantage of periods of negative prices to cheaply charge their capacities.

– For households, direct consequences will not be immediately noticeable, but in the long term it opens up space for more efficient consumption management – Rajakovic pointed out for Nedeljnik.

ETF Beograd

Faculty of Electrical Engineering in Belgrade

Nikola Rajaković

Electricity Market Rules

negative price of electrical energy

renewable energy sources