Why You Still Pay for Negative Electricity Prices

Even with negative electricity prices, you end up having to pay for electricity – a situation that is partially due to the energy grid’s structure. True Energy provides you with the best possible starting point for minimising your electricity costs and carbon footprint – no matter what the electricity prices are like.

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In True Energy’s app users can see when it is cheapest and most environmentally friendly to manually or automatically start things like a dishwasher cycle or charging your electric vehicle. Our users have been privy to the fact that the electricity price is sometimes below zero. 

However, that is not the same as you, as a consumer, receiving direct payments for using electricity at these times. It may strike one as confusing, but there are several reasons for this state of affairs. 

Why have electricity prices been low?

The electricity prices have recently been low. Users of True Energy’s app have been able to follow developments day-by-day and even hour-by-hour. 

There are several contributing factors to the low prices. Firstly, Covid-19 meant lower energy consumption for buildings, including offices. Furthermore, strong production from renewable energy sources, such as Denmark’s windmills and Norwegian hydro plants, has led to production outpacing demand. 

This has led to situations where the electricity price has, at times, been negative. The lowest prices have, unsurprisingly, usually been during the night, as this is when consumption is at its lowest. True Energy’s users have been able to make use of the situation through our automation features to use electricity at the lowest possible prices – also during the night time – without having to set the alarm clock for 3 AM to start the washer and dryer.

Why free electricity costs money

As a consumer, the excess production has led to times where there has been electricity that you ‘would be paid to use.’ As previously mentioned, this has not led to situations where you were going to get a check in the mail from your utility. In best-case scenarios, you may have received a rebate on your next electricity bill. 

Even when electricity prices themselves have been below zero, you will often end up having to pay something for using electricity during those times. One of the main reasons is that the price of electricity is far from the only price component. Added costs include getting the electricity from production spot to your home (grid costs) and various energy tariffs and taxes levied by governments. 

In most cases, what you ‘earn’ by using electricity when the prices are negative is deducted from the other costs. So, what you see is a rebate on your energy bill rather than an out-and-out earning.

It still makes a lot of sense to time your use of energy-hungry devices such as household appliances, and charging of electric vehicles. Doing this during times when the energy price is as low as possible will have a massive positive effect on your energy bill. Furthermore, times with low electricity prices often coincide with times when production is predominantly from renewable sources. So, you will be making your energy consumption both cheaper and more environmentally friendly.

A changing energy grid

Modern energy grids are in a constant state of flux. One dominant trend is the need to incorporate more power coming from renewable energy sources. 

Integrating more renewable energy sources contributes to fluctuations in energy prices. One reason is that weather and wind are often unpredictable, leading to varying production. One way of countering this is using oil and gas-powered backup generators. Unfortunately, they are both expensive operate and more polluting than renewable energy sources.  

True Energy enables our customers to take advantage of low electricity prices. We also help counterbalance the need for fossil fuel backup generators. This happens via our app and patented Big Battery solution. We recommend you download the newest version of our app and explore the many opportunities. 

Read much more about electricity prices, how to use electricity as cheaply as possible, and much more on our blog.