Wind, Solar and Gas: What Moves Electricity Prices

Wholesale electricity prices are moved mostly by how much wind and solar power is available at a given moment, how much gas-fired power is needed to fill the gap, and how much electricity people are using. When the weather supplies plenty of cheap wind and solar output, prices fall, sometimes below zero; when demand is high and the grid has to call on gas and other costlier plants, prices rise.

This guide explains those forces in plain terms, using the grids shown on our market pages. It describes how markets generally behave. It is not a forecast and it is not trading advice.

The short version

Every wholesale market has to match supply and demand continuously. Plants with low running costs are used first and plants with high running costs are added only when they are needed. The U.S. Energy Information Administration describes the same pattern in its consumer guide: when demand is high, “more expensive generation sources are added to meet the increased demand”, and the wholesale price “reflects the real-time cost for supplying electricity”. So the price in any period depends largely on which plant is the last one needed.

Driver	Usual effect on the wholesale price	Where it shows clearly
Strong wind	Lowers it, can push it below zero	Denmark DK1, SPP, South Australia
Bright sun at midday	Lowers midday prices; evenings stay higher	South Australia, ERCOT
Gas needed to meet demand	Ties the price to the cost of gas-fired power	Great Britain, ISO New England
High demand (heat waves, cold spells)	Raises it as costlier plants are called on	ERCOT, PJM
Full interconnectors or lines	Separates prices between neighbouring zones	DK1 against DK2, NEM regions
Water for hydro	Wet periods lower costs, droughts raise them	Tasmania, Norway’s effect on Denmark

Wind: cheap, plentiful and changeable

A wind turbine has no fuel bill, so once it is built its cost of producing one more megawatt-hour is close to zero. EIA puts it simply: wind “can provide low-cost electricity generation when wind speeds are favorable”. When the wind blows hard across a region, wind farms can meet a large part of demand and push costlier plants off the system, and the price drops with them.

The effect is largest where wind is large relative to local demand. The Southwest Power Pool, which covers all or part of 17 U.S. states, reports that wind produced 36.7% of its energy in 2025, even though wind is only 8.4% of its accredited capacity. That gap matters: wind delivers a lot of energy over a year, but grid planners cannot count on it being there at any particular hour. Wind made up 15% of MISO generation in 2023, according to EIA, and the same EIA article notes that wind output in MISO and SPP tends to move in step, because weather systems cross both regions.

In Europe, western Denmark is the clearest case on our pages. Wind on land and at sea is large compared with Jutland’s own demand, so on windy days DK1 often exports, and when the cables are full the local price falls below its neighbours.

Solar: a midday dip and an evening climb

Solar panels also have no fuel cost, but unlike wind they all produce at the same hours. In a sunny region every panel peaks around midday, so solar can flood the market for a few hours and then disappear in the evening. That creates a recognisable daily shape: low prices in the middle of the day and a climb in the late afternoon and evening, when demand is still high but solar output has faded.

Texas shows how important this has become. EIA reports that ERCOT’s hourly load reached a record 91.1 GW on 22 July 2026, at 6:00 p.m. CT, and that the peak was met mainly by natural gas (48%) and solar (32%). The hour of the peak is the point: even at six in the evening, solar was still a large share, and the hours after it, when the sun sets but air conditioning keeps running, are the ones the grid has to cover with other plants.

Rooftop solar adds a twist. Panels behind the meter reduce the demand the grid sees rather than appearing as generation. In South Australia rooftop solar is large relative to demand, so on mild sunny days the demand served by the grid falls sharply at midday, and the spot price can drop below zero.

Gas: the fuel that often sets the price

Gas-fired plants can start and change output relatively quickly, so many grids use them to fill whatever wind, solar, nuclear and hydro do not cover. When a gas plant is the last one needed, its running cost, which depends mainly on the price of gas, tends to set the wholesale electricity price for that period. EIA notes that “higher fuel prices, in turn, may result in higher costs to generate electricity”.

That is why gas prices feed so directly into electricity prices in gas-heavy systems. In New England, natural gas supplied 55% of regional generation in 2025, according to ISO New England. In Great Britain, gas is usually the marginal fuel when wind is low. For households, the link reaches bills with a delay: in Great Britain, Ofgem sets the energy price cap every three months, and wholesale energy costs are one of the parts it is built from.

Demand: weather, time of day and season

Demand is the other half of the price. EIA notes that electricity demand “is usually highest in the afternoon and early evening” and that prices are usually highest in summer, when total demand is high. Heat waves drive air conditioning, cold spells drive electric heating, and both force grids to call on plants they rarely use. Public holidays and weekends work the other way: lower demand, more room for cheap wind and solar, and a better chance of very low prices.

Wires: when neighbours cannot help

A surplus in one place is only a problem if the power cannot be moved. Interconnectors and internal lines have limits. The Great Belt Power Link that joins Denmark’s two price zones has a capacity of 600 MW, according to Energinet; AEMO gives the Heywood interconnector between South Australia and Victoria a nominal design limit of up to 650 MW in either direction. When those links are full, prices on the two sides separate. The European day-ahead auction, which has cleared in 15-minute steps since delivery day 1 October 2025, pulls coupled zones towards one price only while the cables have room.

Hydro and storage: the flexible middle

Water stored behind a dam can be released when prices are high and held back when they are low. EIA notes that rain and snow “provide water for low-cost hydropower generation”, so wet and dry years shift prices too. Tasmania’s generation is predominantly hydro, according to Hydro Tasmania, which makes it behave differently from the mainland NEM regions. Batteries and pumped hydro do something similar on a shorter cycle: they charge when wind and solar push prices down and discharge into the evening peak, which narrows the gap between the cheapest and the dearest hours.

How to read our pages with this in mind

On each market page, look at the generation mix next to the price. A falling price alongside rising wind or solar output is the pattern described above; a rising price with high demand and more gas is the opposite. The negative prices page lists zones where prices are currently below zero, and why prices go negative explains that signal in more detail. The cheapest hours pages show the hours of the day with the lowest published prices in Denmark and the NEM.

Every figure on the site carries a Metered, Derived or Estimated badge, and the methodology explains each one. Prices are provisional and can be revised by the operator. Nothing here is a forecast, and none of it is trading, investment or operational advice.