The Coronavirus Outbreak

By Stanley Reed

The pandemic is turning energy markets upside-down. Some consumers will get paid for using electricity.

Negative prices were once relatively rare, but during the pandemic have suddenly become almost routine in Britain, Germany and other European countries.
Negative prices were once relatively rare, but during the pandemic have suddenly become almost routine in Britain, Germany and other European countries.Credit...Paul Ellis/Agence France-Presse — Getty Images
Stanley Reed

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 actually 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 Staffell, 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 percent 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 Mr. Staffell. It used to be that energy use soared Monday through Friday, and then slumped on Sundays.

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

ImageDemand for electricity in Britain fell by around 15 percent in April,
Demand for electricity in Britain fell by around 15 percent in April,Credit...Andrew Testa for The New York Times

These factors could be seen at work on Friday when British power prices reached as low as minus 70 pounds ($85) per megawatt-hour, which is enough electricity to light up several hundred homes for an hour. Demand was low on the eve of a three-day weekend during lockdown, while wind farms and nuclear plants were generating unusually high proportion of power, according to Drax Electric Insights, a website that tracks power statistics.

The below-zero price environment is allowing at least one innovative British power retailer called Octopus Energy to offer to pay some of its customers 2 pence to 5 pence per kilowatt-hour for electricity they consume in periods of slack demand, such as are expected on Sunday.

“This needs to become the normal,” said Greg Jackson, the company’s founder and chief executive, who said that the pandemic in Britain was offering a preview of “what the future is going to look like” across the globe.

Analysts and industry executives share that view, assuming efforts to shift to a clean energy system continue.

National Grid is paying the French utility EDF to temporarily reduce by half the output from a reactor called Sizewell B.Credit...Russell Boyce/Reuters

But the trend away from gas- and coal-powered generators comes with risks. The power system may become less stable, and a tough place to make money.

In recent weeks, renewable energy sources like wind and solar have played an increasingly large role in the European power system both because of enormous investments in these installations and because of favorable weather conditions. At the same time, the burning of coal, the dirtiest fossil fuel, has slipped. Britain, for instance, has not consumed any coal for power generation for weeks.

Such a big drop is, of course, good news for tackling climate change, but the combination of low demand and high levels of wind- and solar-generated electricity is a big shift that power system operators are struggling to manage.

Renewables fluctuate in output — think of a windless, cloudy day — and are harder to turn off at times of low demand, leading to more negative prices and the potential for instability on the networks.

“The focus has been on generation and building more and more wind and solar onto the system,” said Julian Leslie, head of networks at National Grid ESO, which operates the British power system operator.

Mr. Leslie said that in 10 or 15 years, it will likely be easier to match demand with supply through methods like charging electric vehicles when power supplies are high. “We will be able to have much more control over the demand,” he said.

  • Updated May 20, 2020

    • Over 38 million people have filed for unemployment since March. One in five who were working in February reported losing a job or being furloughed in March or the beginning of April, data from a Federal Reserve survey released on May 14 showed, and that pain was highly concentrated among low earners. Fully 39 percent of former workers living in a household earning $40,000 or less lost work, compared with 13 percent in those making more than $100,000, a Fed official said.

    • If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)

    • There is an uptick in people reporting symptoms of chilblains, which are painful red or purple lesions that typically appear in the winter on fingers or toes. The lesions are emerging as yet another symptom of infection with the new coronavirus. Chilblains are caused by inflammation in small blood vessels in reaction to cold or damp conditions, but they are usually common in the coldest winter months. Federal health officials do not include toe lesions in the list of coronavirus symptoms, but some dermatologists are pushing for a change, saying so-called Covid toe should be sufficient grounds for testing.

    • The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.

    • If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.

    • Charity Navigator, which evaluates charities using a numbers-based system, has a running list of nonprofits working in communities affected by the outbreak. You can give blood through the American Red Cross, and World Central Kitchen has stepped in to distribute meals in major cities.

For now, though, the market takes over, causing prices to fall to a point where utilities decide it is better to shut down generators than pay to put power into the system.

Construction of the Hinkley Point C nuclear power station in 2018 in Somerset, England. Nuclear plants have continued to churn out power despite reduced demand. Credit...Matt Cardy/Getty Images

“If you have too much production, you need to send a signal to the market to stop producing that much,” said Philippe Vassilopoulos, director of product development at EPEX SPOT, an exchange where electric power is traded.

A negative price incentivizes large consumers of power to not hold back, Mr. Vassilopoulos said. For instance, a supermarket might profit from revving up its electricity-hungry refrigeration units during negative price periods. Households are less able to benefit from low prices because they often have inflexible contracts and lack the software and other tools to alert them to optimal times to consume power.

“The volatility in the system, the reduction in demand means that National Grid as a system operator is having to work really hard,” said Ian Kinnaird, head of hydro at Drax, a British electricity generator.

Mr. Kinnaird runs a unit called the Cruachan Power Station that smooths the turbulence created by wind farms, 55 years after it was first opened by Queen Elizabeth. Consisting of a hollowed-out mountain in Scotland with reservoirs at the top and bottom, Cruachan releases water through a generating turbine when National Grid wants to add oomph to the system and then pumps it back up the hill when the call is to absorb excess electricity.

The Drax power plant near Doncaster, Britain.Credit... Tom Jamieson for The New York Times

National Grid is also taking some extraordinary steps to reduce power supplies. It is paying EDF, the French utility that runs most of Britain’s nuclear fleet, to temporarily reduce by half the output from a reactor called Sizewell B. It has also worked out a deal with the owners of small renewable plants to compensate them if it asks them to shut down.

Still, analysts say that the unusual pressures in the market are unlikely to disappear overnight. Sunnier summer days, for instance, may increase the amount of solar power in the system, meaning negative prices are “only going to get to be more of an issue,” Mr. Staffell said.