Electricity prices are dropping below zero in Europe. Here’s why that isn’t a good thing

By Liam Gilliver Published on 05/05/2026 - 7:00 GMT+2 Share Comments Share Facebook Twitter Flipboard Send Reddit Linkedin Messenger Telegram VK Bluesky Threads Whatsapp

Negative energy prices may seem like a welcome relief amid the cost-of-living crisis but the phenomenon can actually discourage renewables investment.

The surge in solar and wind energy has been attributed to the spike in negative electricity prices sweeping across Europe.

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According to analytics firm Montel, negative electricity prices on the Iberian Peninsula hit a new all-time high in the quarter of 2026. This is where the wholesale market of electricity dips below zero due to supply outstripping demand.

Spain was hit the worst, recording 397 hours of negative prices between January and March, a significant spike compared to the 48 hours registered in the same period of 2025, while Portugal reached 222 hours of sub-zero prices during the same period.

A separate Bloomberg analysis, using data from Epex Spot SE, found that in France, the number of hours with sub-zero pricing nearly doubled this year compared to 2025, while Germany has also witnessed a 50 per cent increase.

Most of the negative prices were recorded in April, attributed to a spike in solar generation due to longer periods of daylight. Blustery conditions sweeping across Europe have also bolstered wind energy output, meaning more energy is being produced than needed.

Spanish consultancy firm AleaSoft Energy Forecasting found that Germany recorded the lowest daily average electricity price at -€16.34 MWh on 5 April. On the same day, the French market recorded a negative daily average electricity price of -€3.56 MWh, while Belgium recorded an average of €0.05 MWh.

British, Nordic and Dutch markets registered their lowest daily averages since October 2025, at €6.85, €7.61 and €14.46 MWh, respectively.

While negative electricity prices may sound like a welcome relief amid spiralling energy costs, this increasing phenomenon won’t actually lower your bills.

Why do negative electricity prices occur?

Electricity prices go negative when supply exceeds demand. In Europe’s day-ahead market, energy producers submit offers saying how much electricity they will sell at what price. Normally, that price is positive.

However, as we enter Spring and the days get longer, ideal weather conditions can drastically boost solar and wind output – meaning more energy is being produced than is needed. This can often occur on public holidays, when people are more likely to be using less energy than they normally would.

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Generators can underbid each other, based on operating and restart costs, to avoid being switched off (curtailed). This is because they either still make money through subsidies/contracts or because they will lose more money through curtailment.

Last year, for example, Britain wasted a staggering £1.47 billion (around €1.67 billion) by turning down wind turbines and paying gas plants to switch on.

How can Europe stop negative electricity pricing?

Solving negative electricity pricing is no easy feat. Europe’s outdated energy grid was never designed for the renewables boom, and is instead set up for centrally-located plants. This means that wind and solar energy – which tend to be located in remote areas – often can’t get to where it is needed, like homes and offices.

While grid investment in Europe has increased by 47 per cent over the past five years to around €70 billion annually, experts warn it still falls short of what’s required.

A recent report by energy think tank Ember warns that more than 120 GW of anticipated renewables are at risk due to Europe’s “insufficient grid capacity”. This includes 16GW of rooftop solar installations, impacting more than 1.5 million households across Europe.

Giving away free or discounted energy is another way of tackling negative electricity prices, an incentive already being considered in the UK. Greg Jackson, CEO of Octopus Energy, which has long been pushing for reforms to provide cheaper energy rather than curtailing wind power, says such initiatives should be made permanent to persuade consumers to invest in electrification.

Is battery storage the solution?

The main issue around negative electricity prices is that excess electricity is hard to store. This has resulted in calls to bolster Europe’s battery energy storage systems (BESS).

Last year, the EU installed 27.1 GWh of new BESS – marking 12 consecutive years of record growth.

According to a 2026 Solar Power Europe report, despite a tenfold expansion of the EU battery fleet since 2021, reaching more than 77 GWh today, Europe remains “far from where it needs to be”.

To meet its 2030 targets, the EU must repeat its tenfold growth once again – scaling battery storage towards 750GWh within the next five years.

Five EU markets delivered more than 60 per cent of all new BESS capacity in 2025, with Germany and Italy leading the race. Bulgaria became the fastest-growing market, bumping up to third place, followed by the Netherlands and Spain.

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