‘Direct-from-grid’ electricity: a cost-saving option
Hands-on purchasing gives larger users a chance to benefit from wholesale pricing
It’s well known that the price of electricity is high in New England, and specifically high in New Hampshire. But even with that reality, there are solutions to mitigate the issue, specifically for heavy users.
During a four-day period from May 4 to May 7, when electricity pricing in the New England wholesale market reached an unusual low, many of the region’s largest wholesale energy users were actually paid to use electricity.
The average price of electricity was negative, so instead of paying for the electricity that they used, they received a credit for the amount that they used. This is something that all large users should be aware of; not many typical users are aware that there is a framework in place to navigate the grid and lessen the constant burden of electricity pricing.
In 2014, ISO-NE implemented policy enhancements to the wholesale energy market that allowed electricity prices to go beyond zero to being negative during certain hours. These changes allowed generators to submit price offers for each hour of the day based on their actual cost of fuel, including negative price offers.
At times of excess energy on the grid, certain generators have made operational decisions to continue producing free and even negative-priced energy rather than shut down and then restart again hours later. It’s called buying direct from the New England Power Pool via hands-on purchasing, and it’s a reality. Large-scale manufacturers are among the businesses that can actually benefit from these market movements.
Freedom Energy Logistics is working with its customers one-on-one to encourage them to take advantage of the “direct-to-grid” purchasing process based on those policy changes at ISO-NE.
One of our customers, Shipyard Brewing Company of Portland, Maine, recently reaped the benefits.
“We’ve been buying directly from the New England Power Pool for almost a decade now and have done extremely well,” said Paul Hendry, plant manager at Shipyard.
Simply said, while energy costs are indeed high, it’s a great time to be purchasing electricity wholesale.
How does this help the general New Hampshire resident? It’s economic development smart. We often hear that the cost of energy is among the leading barriers to businesses locating and operating in New Hampshire. Such positive results of business-friendly policy improvements and creative energy buying strategies are a welcome change in tune.
Gus Fromuth, managing director of Freedom Energy Logistics, is a founding member of the NEPOOL Market Participant End User Sector.