Free electricity: How to tap into negative price periods
The concept of free electricity might sound too good to be true, but it’s already a reality during certain periods in the UK. As this article outlines, already today, there are many periods when electricity prices are zero or negative in the UK, and the number thereof is sharply increasing.
To capture the opportunity, you only need one thing: a smartly managed battery.
The topic in a nutshell
In 2024, the UK had 225+ hours of free electricity, with projections hitting 1,000+ by 2027.
Octopus Agile and similar tariffs let you charge a home battery when prices go negative.
Charge cheap, sell high, and even earn grid rewards - cutting bills to near zero.
How often do negative price periods occur?
In 2024, the number of negative price hours increased 60%, to about 225 hours up from 140 hours. These negative price periods occur when the supply of electricity is higher than demand. In the UK, this happens mostly when there is excess generation of wind and solar power, most commonly from midnight to 5:00 am and 11:00 am to 3:00 pm.
The number of negative price hours in the UK is expected to grow further in the coming years. Bloomberg BNEF projects about 1,000 negative price hours by 2027 – equivalent to one in nine hours – that is a staggering 100X increase over 2021 levels (see Figure 2).
How can I benefit from negative energy price periods today?
As a residential energy customer, you won’t have direct access to wholesale electricity markets.
However, there are a few tariffs which “track” wholesale prices and allow you to tap into free electricity opportunities. This means, with these tariffs, you will always pay a fixed charge + the wholesale price times a fixed multiple. These tariffs are:
- Octopus Agile
- Tomato Smile
- Let’s focus on Octopus Agile as an example: Their model is quite unique because they update every 30 minutes and directly reflect the wholesale market prices. Their formula has a few elements (see Figure 3). Here, D is a coefficient that includes their distribution costs which varies by location. W is the wholesale cost of electricity, and P is the peak-time premium, applied between 4:00 - 7:00 pm, and varies by location. For example, London’s “D-value” is 2, and “P-value” is 12. Comparatively, Yorkshire has a “D-value” of 2, and a “P-value” of 13. Being a “minimum” formula, it means that you won’t ever pay more than 95 p/kWh.
This means the cost of electricity changes in real time throughout the day. For a consumer, it means you pay a base charge plus the wholesale fixed price multiplied by a fixed factor. Octopus always publishes next day’s rates between 4:00 pm and 8:00 pm in the evening on their dashboard (see Figure 4).
Including the markups suppliers like Octopus charge on top of wholesale prices, there were 175 hours of negative prices that you could have tapped into (see Figure 5)!
How do I tap into these negative periods to get free electricity?
Put simply, through a smartly managed home battery.
In 2024, the average import price on Agile was 17.3 p/kWh—over 25% cheaper than standard fixed tariffs. But the real game-changer is combining this with a home battery:
Combining Agile with a home battery has the potential to produce zero bills or even turn your bills into a profit. How does this work? A battery can do three things for you (taking a 20 kWh home battery as an example):
- Charge cheaply and save: By charging your battery during negative or low-price periods, you can store energy for later use when rates are higher. Charging at the two cheapest hours every day in 2024 could have enabled electricity import costs of just 10 p/kWh - about 60% cheaper than the typical rate of 25 p/kWh. For an average household consuming 3,500 kWh annually, this would result in an annual saving of about £525.
- Sell high and earn: During peak pricing, sell your surplus electricity back to the grid at up to 8.8 p/kWh, creating a revenue stream from the energy you store. By selling half your stored energy at 8 p/kWh, you could have generated £280 in revenue. This would have reduced your final electricity bill to just £70.
- Stabilise the grid: With a battery, you can also get paid for helping to stabilise the grid. For a typical household battery, this would mean additional benefits in the order of £250-500 annually. Combined with charging cheaply and selling high, smart planning could help you achieve near-zero electricity bills. Curious about how to get started? Learn more about joining grid services in the UK in our latest article.
In the future, the benefits are expected to increase even further, as the number of negative price hours increases.
The only issue is that this process is, currently, quite tedious. Adjusting the charging schedule every day, checking the prices for your supplier for the upcoming day is a hassle.
That is why we, at Capture Energy, are currently developing a software solution that takes away the hassle for you.
Join our program today by answering the short survey below to unlock free electricity and achieve zero energy bills by 2025.
