Pioneering energy transformation in Australia
Negative prices: how they occur and what they mean.
- Prices in the wholesale electricity market are determined by supply and demand. Energy generators offer to supply the market with specific amounts of electricity at certain prices. The Australian Energy Market Operator stacks the offers for each five-minute block of time in ascending price order and then progressively schedules them into production to meet demand, starting with the least-cost bid.
- Negative prices occur when supply offered at negative prices is greater than demand. These events generally occur in the middle of the day when generators (i.e., rooftop solar, large-scale solar, wind and coal-fired generators) are competing to dispatch their energy.
Effect of renewable in negative pricing.
- An increased number of renewables generators (i.e., rooftop solar, large-scale solar, wind farms etc.) have made negative prices increasingly common. The rising share of renewable power has made power prices much more volatile and negative prices have become a common phenomenon. The number of hours with negative power prices have increased steadily in the last few years.
The increase in energy negative pricing is threatening the profitability of energy companies. One of the most effective ways to combat this is to switch off power generation sources during the negative pricing window to curb losses.
Coal-fired generators, however, incur significant costs stopping and starting and require many hours to restart. This means they continue generating throughout negative pricing periods as it is more cost-efficient to incur the costs of negative pricing than shutting down and restarting again. This ensures that they are available to meet peak demand in the late afternoon and evening.
However, intermittent, and fast response power generation sources such as rooftop solar and large-scale commercial solar systems can be managed relatively easily and remotely using an intelligent Distributed Energy Resources Management system.
Power market players have learnt to deal with the negative pricing scenario. They are developing and deploying DER systems which can predict the negative pricing window and operate on fast response energy generation sources. Intermittent and fast response energy sources (such as solar, wind, peaking generators) can stop and start in relatively short spaces of time to avoid negative price periods.
Our energy client engaged with commercial solar customers to collaborate with this program by offering benefits which takes care of both customers’ and clients’ financial goals. On agreement, the customer is setup within the Virtual Power Plant via an IoT device.
E-Flex uses advanced machine learning to predict negative pricing event for customers’ solar power generation. The machine learning model uses energy trading data, historical pricing data, weather information to predict future negative pricing events for customers suburb or location.
The customer’s solar generation unit is connected to the VPP using a third party IoT device, called droplet. The droplet works as a scheduler & controller for customer’s solar device. The IoT droplets are issued commands to operate by the machine learning program deployed in the Cloud.
Based on the predicted threshold it automatically applies DER control to switch off export from the customer’s solar generation unit remotely. On completion of the negative pricing window the system turns back on the solar generation unit. During this tenure, the export to the grid for solar generation becomes zero. This reduces the clients buy-back cost for the engaged customers. The customers are provided upfront credit as well as reimbursements for energy and cost.
Industry: Energy and Clean Technologies
Technologies used: Microsoft Azure - IoT