Electric vehicles (EVs), heat pumps and other electrical devices can benefit from variable electricity prices. Understanding how electricity spot prices change can help you take advantage of the opportunities.
The electricity spot price can play a big role in the utility bill. This is doubly true for owners of EVs or electric heat pumps. However, everyone can benefit from following – and reacting to – spot price developments.
If you have or are considering a flexible electricity contract (also known as a spot price contract), the spot price helps decide the size of your electricity bills.
With electricity prices on the rise, timing your energy use to coincide with the lowest costs, not to mention CO2 emissions, becomes even more attractive.
This is one of the areas where True Energy can help. Read more about that and core questions surrounding electricity spot prices below.
What is the Electricity Spot Price?
The electricity spot price is a market price. It is determined based on supply and demand on electricity exchanges. For the Nordic region, the exchange is Nordpool. The price varies hourly.
In the Nordic region, as elsewhere, energy production increasingly comes from renewable energy sources. As a result, the hourly electricity price is highly dependent on weather conditions – especially wind and precipitation. This can make the spot price more volatile.
In Denmark, large parts of the electricity production come from wind turbines. In Norway and Sweden, ydropower accounts for large parts of the production.
What is the Connection Between Electricity Spot Prices and My Utility Bill?
That depends on what kind of utility contract you have. If you have a variable energy contract, also known as a spot agreement, it is core to the size of your bill.
The spot price of electricity varies from hour to hour. If you have a variable contract, the price you pay for electricity varies in accordance with those changes. Other types of utility contracts have a set rate. That means you pay the same for using electricity, no matter how the spot price changes.
The upside to a variable contract is that you can take advantage of lower spots prices to minimise your bill. The downside is that it can be difficult to match your energy use to times with lower spot prices.
When Should I Use Electricity?
Again, the answer varies. Hourly, daily, and seasonal changes have a big influence. This is especially true in areas with large production from renewable energy sources. For example, windy days have on occasion led to negative spot prices.
However, there are some general rules of thumb. One is that it is often cheaper to use electricity at night. Timing your EV charging or using the washing machine at night can help dramatically lower your overall energy expenses. At night at lot of electricity production is often also climate-friendly, as most of it is produced from renewable energy sources.
The most expensive periods are usually the morning hours and the late afternoon to early evening hours.
Finally, weekdays are usually more expensive than weekends.
How Can I Take Advantage of Electricity Spot Price Changes?
Even with a spot price agreement, getting the best results is far from guaranteed.
First, you need to have a way of following spot price developments hour by hour and day by day. Secondly, most of us will need a way to automate our consumption. Setting the alarm to 2.30AM to charge the EV and start the dishwasher is not an attractive proposition – even for the most hardened early risers.
With a nod to Janteloven and Carlsberg, this is where we come into the picture. True Energy’s app is probably the best and easiest way to both automate and simplify energy consumption while enabling you to lower your utility bill and CO2-emissions.
For example, you can use our solutions to automate EV charging to happen when the electricity price is lowest – even if it is not in one, conjoined period.
What is the Difference Between Electricity Spot Price and Electricity Price?
With the previously mentioned negative spot prices in mind, you could be tempted to expect that you will sometime be getting paid to use electricity with a variable contract. Sadly, this is not the case.
The spot price is not equal to your electricity price – even with a variable contract. There are a lot of other factors involved.
In addition to the actual price of the electricity, you pay subscription fees to the electricity company, energy taxes, VAT, energy transport costs and more.
That being said, the spot price is an important price factor. With True Energy’s app in hand, you are looking at saving both your wallet and help the environment with a variable energy contract.