Why electricity prices go negative

Every so often, the wholesale price of electricity in Great Britain falls below zero: for a few hours, anyone consuming power at market price is being paid to do it. It sounds like a glitch. It is actually the market telling the truth about a grid with more renewable output than demand - and the moments it happens are visible in the wholesale price on Grid pulse.

How a price goes below zero

Electricity supply and demand must match every second, and storage is still scarce. When a windy night meets low demand, someone must stop generating - and the market finds out who by letting the price fall until enough generators volunteer.

The catch: much of the fleet doesn’t want to stop. Nuclear plants are inflexible and safest running steady. Some renewables earn per-megawatt-hour subsidies, so any price above the negative of their subsidy still leaves them ahead. A gas plant mid-shutdown faces restart costs bigger than a few negative hours. So prices can sit below zero for a while before enough supply blinks.

Who wins

Flexibility does. Batteries charge while being paid to. Pumped storage pumps water uphill on the same logic. Smart-tariff households run cars and heaters on the grid’s surplus - negative price hours and the greenest hours are usually the same hours, because both are made of wind. The interconnectors export the surplus toward any neighbour whose price is higher.

Why it’s becoming more common

More wind and solar means more hours when near-zero-marginal-cost output covers demand by itself. Negative-price hours were a curiosity in the mid-2010s and are now routine in blustery shoulder seasons. They overlap heavily with curtailment: the same windy nights that send prices negative also jam the wires out of Scotland.

Two honest footnotes. Negative wholesale prices don’t mean negative bills - most households buy at fixed tariffs, and network costs and levies sit on top. And the imbalance price shown on Pulse is the balancing market’s price, which can diverge sharply from the day-ahead wholesale price in the same half-hour - two markets, two numbers, both real.