Market Snapshot: Alberta wholesale electricity prices in 2017 set record for number of $0 hours

Release date: 2017-09-06

As of 31 July 2017, Alberta had already experienced a record 41 hours, in 2017, when the wholesale electricity price settled at $0 per megawatt hour (MW.h). The previous record was 39 hours for all of 2012. A $0 hour is rare, occurring only 108 times and representing only 0.07% of hourly prices since 2000.

Source and Description

Source: AESO, NEB

Description: This stacked bar chart illustrates the number of hours when the wholesale electricity price settled at $0 per MW.h from 1 Jan, 2000 to 31 July, 2017. It is separated to show how many of these hours occurred in May, June, and all other months. There were no instances where the price settled at $0 per MW.h in 2000 – 2003, 2005, 2006, 2009, and 2014. The years with the highest number of occurrences were 2012 (with 39) and the first 7 months of 2017 (with 41). All remaining years had 6 or fewer. There were 108 occurrences in total, of which 17% were in May and 67% in June.

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. 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% of $0 hours have occurred early in the morning. Of these, 67% were in the month of June and 17% 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 ColumbiaFootnote 1 during the month of June, 2017.

 

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