Reduced demand for power leads to electricity giveaways

The coronavirus pandemic has played havoc with energy markets. Last month, the price of benchmark American crude oil fell below zero as the economy shut down and demand plunged.

And now a British utility this weekend will pay some of its residential consumers to use electricity — to plug in the appliances, and run them full blast.

So-called negative electricity prices usually show up in wholesale power markets, when a big electricity user like a factory or a water treatment plant is paid to consume more power. Having too much power on the line could lead to damaged equipment or even blackouts.

Negative prices were once relatively rare, but during the pandemic have suddenly become almost routine in Britain, Germany and other European countries.

In Britain, the price of power plunged into negative territory 66 times in April, more than twice as often as in any previous month in the last decade, according to Iain Chappell, senior lecturer in sustainable energy at Imperial College in London. The reason for these dips is similar to what caused the price of oil to plunge: oversupply meeting a collapse in demand.

With Britain in lockdown since March 23 and offices and factories closed, demand for electricity fell by around 15% in April, while at the same time wind farms, solar panels, nuclear plants and other generating sources continued to churn out power.

“Power systems all around the world are entering completely unprecedented territory,” said Chappell. It used to be that energy use soared Monday through Friday, and then slumped on Sundays.

Now, Chappell said, “working days are now all Sundays.”