Why prices go negative
Why wholesale electricity prices can fall below zero and what that signal means.
Wholesale electricity prices usually sit above zero, so a negative price looks like a mistake. It is not. It is the market telling producers that, for this period, power is worth less than nothing to the system, and that someone must be paid to take it. This page explains the general mechanisms. It uses no live numbers.
What a negative price means
In a wholesale auction, sellers state the lowest price at which they will produce and buyers state the highest price they will pay. When supply that will run at almost any price exceeds demand, the clearing price can drop through zero. Generators then pay the market to keep injecting power, and consumers are paid to take it. Because electricity must be balanced second by second and cannot be stored cheaply in bulk, a surplus cannot simply be left on the shelf.
A useful way to think about it: a negative price is the cheapest way the market can find, in that period, to persuade enough producers to switch off or enough users to switch on. Every seller who would rather pay than stop keeps running; every seller who would rather stop than pay drops out. The price settles where the remaining supply just matches demand.
Who pays whom
In a period with a negative wholesale price, a generator that is dispatched pays for each megawatt-hour it sells into the market, and a buyer on the wholesale market is paid for each megawatt-hour it takes. That applies to wholesale market participants. Most households and businesses buy through a retail supplier on a fixed or regulated tariff, so they do not see the wholesale sign change on their bill.
Inflexible generation
Some plants are expensive or slow to stop. A large coal or nuclear unit may take hours to ramp down and days to restart, and stopping can cost more than running at a small loss. Combined heat and power plants may have to run to supply a district heating network. Grid operators also require some units online for voltage and frequency control, which sets a floor under conventional output. When demand is low and cheap renewable power is plentiful, these units keep running, and their owners accept a negative price as the lesser cost.
Subsidy designs that pay per megawatt-hour
Many renewable plants earn support for each megawatt-hour they generate, through production tax credits, premiums or certificates. A wind farm with such support still profits at a slightly negative market price, because the subsidy more than covers the loss. So it keeps generating, and the price can fall until the subsidy is outweighed. In the United States, the federal production tax credit, described on a Department of Energy page, pays per kilowatt-hour supplied to the grid and works on this principle. Other designs, such as contracts for difference or fixed-price auctions, differ in whether the producer sees the market price, and some newer rules suspend payments during negative-price periods to remove the incentive.
Low demand with high wind or solar
Negative prices cluster where demand is low and renewable output is high at once: sunny spring middays, windy nights, public holidays. Solar is especially synchronised, since every panel in a region produces at the same hours. A sunny weekend afternoon can leave far more midday supply than the region needs. Australia’s market operator tracks how often this happens in its Quarterly Energy Dynamics reports.
Rooftop solar strengthens the effect without appearing as supply in the market at all. Panels behind the meter reduce the demand the grid has to serve, so on a mild sunny day the grid sees a deep midday dip in demand while large wind and solar farms are still producing. Wind works on a different clock: a windy night with low demand can push prices below zero at hours when solar is irrelevant.
Export and transmission constraints
A region can have a surplus even when its neighbours would gladly use the power, if the wires between them are full. Interconnectors have limits, and so does the network inside a region. Then the price in the exporting zone falls while the neighbour stays higher. This is why two bidding zones in one country, such as the two Danish zones, can show very different prices at the same moment.
The same thing happens between the regions of Australia’s National Electricity Market. South Australia, which has no coal generation and relies on wind, solar and gas, is joined to Victoria by a small number of links; when they are full, a surplus in South Australia stays in South Australia, and its price can sit below zero while Victoria’s does not.
Price floors and caps
Markets set technical limits on prices. Some have a negative floor, below which bids are not accepted, so extreme surpluses are met with curtailment instead of ever lower prices. Others have rules for what happens when a long run of negative prices occurs.
Floors and caps are set by each market’s rule-maker and are published. In the National Electricity Market, for example, the market price cap for 2026-27 is A$23,200/MWh, set by the Australian Energy Market Commission, and negative prices are allowed. Our quality gates reject a price only when it lies beyond twice the known cap or floor of its market, so a deeply negative price within the rules is kept and shown.
How negative prices look in the markets we track
| Market on this site | Price we show | Can it go negative? | What usually drives it |
|---|---|---|---|
| Denmark DK1 and DK2 | Day-ahead auction, 15-minute | Yes | Strong wind, full cables to neighbours |
| Australia (NEM regions) | Five-minute dispatch | Yes | Midday solar, wind, low demand, full interconnectors |
| Great Britain | Imbalance and market index, half-hourly | Yes | High wind with low demand |
| Taiwan | No price in the feed | Not shown | No price is published |
| United States (EIA-930) | No price shown | Not shown | We show grid data only |
The type of price matters. A day-ahead price is fixed the day before delivery, so a negative Danish price reflects the expected surplus for that quarter-hour. A five-minute NEM dispatch price reflects conditions in that interval. A British imbalance price reflects the cost of the actions the system operator took to balance the system in that half-hour. All three can be below zero, but for slightly different reasons.
How long negative prices last
Most negative-price episodes are short: a few intervals around midday or during a windy night, ending when demand rises, the wind drops or the sun sets. Longer runs happen when a large surplus persists, for example over a sunny, windy holiday weekend. Because intervals differ by market (15 minutes in Denmark, five minutes in the NEM, half an hour in Great Britain), the same weather can produce a different count of negative intervals in each place. Compare durations in hours, not in number of intervals.
What reduces negative prices
Storage, such as batteries and pumped hydro, absorbs the surplus and returns it later. Flexible demand, interconnection, and curtailment rules that let producers switch off when prices turn negative all shorten the episodes. None of these removes them entirely, and a negative price is a signal for such investments rather than a fault.
What it means for households
A negative wholesale price does not usually mean free electricity at home. Household bills include network charges, taxes, levies and supplier costs that stay positive whatever the wholesale price does. Customers on tariffs that pass through the wholesale price hour by hour can see very low or even negative energy rates in those periods; customers on fixed tariffs do not. In Denmark, our Danish-language elpriser pages show the published network tariffs alongside the spot price, so the difference is visible.
How to read it on this site
When a price on our market pages is below zero, it is a genuine market result, and our quality gates keep it. It is not a forecast and not advice. Prices are provisional and may be revised. The negative prices page lists zones currently below zero, and the glossary defines the terms used here.