By September 7, 2017 0 Comments Read More →

Alberta wholesale electricity prices in 2017 set record for $0 hours

Electricity investments

Wholesale electricity investments Alta Energy photo.

Since 2000, 92 per cent of $0 hours occurred early in morning

As of 31 July, Alberta has already experienced a record 41 hours of wholesale electricity prices at $0 per megawatt hour (MW/h), according to a National Energy Board press release.

The previous record was 39 hours for all of 2012. A $0 hour is rare, occurring only 108 times and representing only 0.07 per cent of hourly prices since 2000.

In Alberta electricity is generated, then sold and bought on the wholesale electricity market.

The price is settled hourly by the balance of supply and demand, and can fall anywhere between $0 per MW.h to $999.99 per MW.h.

wholesale

Electricity producers sometimes offer their electricity into the market at $0 per MW.h because the cost of shutting down and restarting their facility is more costly than generating electricity below cost for a few hours.

Intermittent generators, such as wind turbines, are price-takers and accept the market price during the hours they generate.

To ensure they are dispatched to generate, wind turbines offer to generate at $0 per MW.h.

Since 2000, 92 per cent of $0 hours have occurred early in the morning. Of these, 67 per cent were in the month of June and 17 per cent in May.

During these periods, demand for lighting, space heating, and cooling is typically lowest and wind generation is usually also higher.

The record number of $0 hour occurrences in 2017 coincides with higher than usual electricity imports from British Columbia during the month of June, 2017.

During Q2, 836.5 GWh of net imports flowed into Alberta (4.7% of Alberta Internal Load), up from 96.5 GWh during the same quarter of the previous year. Alberta was a net importer in 82% of hours in the quarter, according to the quarterly report from the Alberta Electric System Operator.

These large import volumes were primarily sourced from British Columbia, which experienced increased hydroelectric generation due to snowpack levels greater than the 1981-2010 average.

In order to facilitate these imports, the AESO procured an additional 213.8 Gigawatt hours (GWh) of contingency reserves, at a total cost of $10.7 million.

Together, this enabled a total of 285.1 GWh of imports into the Alberta system, earning $4.6 million in revenue from the energy market.

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