Celebrating curtailment: Are negative prices really that bad?

Hello listeners and welcome to Plugged In - the Energy News podcast from Montel, where we bring the latest news issues and changes happening in the energy sector. Paying consumers to use electricity is becoming increasingly common in wholesale power markets across Europe. On particularly sunny or windy days, electricity prices can fall below zero, meaning generators have to curtail production or effectively pay consumers to take power off the grid From Germany and the Netherlands to France and Spain.

These negative pricing incidents are becoming more frequent, deeper, and increasingly controversial. At least, much more politicised. Critics argue they distort markets and scare off investment while others see them as a vital signal in an energy system rapidly filling with renewable power. So what's really driving these price collapses is Europe building renewable generation faster than it can expand grids storage and flexibility.

And our negative prices actually proof that the energy transition is working exactly as intended. Montel journalist Caroline Pailliez, has been following the growing debate around negative prices across Europe's power markets and joins the discussion as we unpack what's really behind these extremely low prices. Welcome to Plugged in Caroline. Thanks a lot, Richard.

It's a pleasure to be on the Plugged In podcast. Fantastic. I we're talking about negative prices today. I mean, I did some research.

I found the first instance as, as far as I'm aware occurred in 2012 in Germany, but they're becoming ever more prevalent. Now, for those out there who maybe don't cover or look at power markets, when we talk about negative prices, what exactly are we talking about, Caroline? Well, so in terms of negative prices, that, of course we can't store power. So that's actually the big the big issue there.

So when generation outpaces demand that's the wholesale market still needs to balance supply and demand in real time. And so what happens is that price fall. And so negative price means that there is not enough demand and producers are paying the market to take their power for that period of time. So that's what it means.

It's really when there is too much supply and not enough demand. Perfect. So this really, we're talking about the wholesale market aren't, we're not talking about retail customers. You and my, you and me, at home, we're not getting paid to, to use power, are we?

No, of course it's gonna be on the wall sand market. Yes, for sure. For sure. Yeah, this year has been a bit crazy, but, you know, we've seen a record number of hours with negative prices this year.

And so just looking at the first quarter some countries like Spain for instance, saw almost 400 hours of negative prices, compared with 48, only for the same period last year, according to multi analytics data. So that's a big jump, but it's something, that has been affecting every country in Europe. Just to give you an idea, in France, a number of negative hours in 2025 have increased by 45% compared to last year. And in Germany and Belgium it's 26, 28% Spain.

It has doubled. So it's really something that's becoming more and more common. And, as you mentioned, it was pretty rare before. So what's the main reason for this change then, Caroline?

What, what's what are people saying? What, how have the power systems changed over the last 14 years to make it such a prevalent occurrence? So we know that these negative prices happen usually in the middle of the day, and that's when a solar generation is very high and when conception is the lowest. So you have the highest imbalance there.

So what has changed is, we've built large fleets of renewables over the last years, and they all produce at the same time, in the middle of the day mostly. So that will create sudden surplus. And yes, for solar it's gonna be in the middle of the day. For wind, it's less predictable because it depends more on the weather.

But it was, yeah. We've built a lot of plants, renewables plants to reach our European climate targets. And it's a good thing because it's a way to phase out of fossil fuels, of course, and to have cleaner energy. And just to give you an idea again, according to our Montels Clean Power Progress Index, so this is our latest report, which looks at the power sector, decarbonization progress of countries around Europe.

Europe added over 70 gigawatt of renewables last years. And nearly 80% of this is coming from solar alone. So that's a lot. That's a huge increase.

Just to finish off, Caroline, when we're talking about negative prices, could you give us some indication of the range? Sometimes we are just minorly below zero. Sometimes we go, in, in several hundred euro negative territory, right? Yeah.

What has been very striking this year is the depth of the negative prices. As early of 26, April, maybe you've talked about this with your guest return, but prices fell below minus 400 euros per megawatt hour in Germany, France, Belgium, Hungary, and for the 1st of May, which was a bank holiday in many countries in in Europe, prices hit the price floor of minus 500 euros per megawatt in the, in a lot of, in Hungary. And it came close in France, Germany, Austria and so on. A lot of countries.

So the magnitude of those prices seems to have really taken a turn this year. But still a lot of prices are around zero, min are very close to zero as well. So we have both kind of prices really. Caroline, thank you very much indeed for setting the scene for us for this week.

You're welcome. It's a pleasure. To help us unpack why Europe is increasingly seen, periods where consumers are effectively being paid to use electricity, and what that says about the future of the power system. I'm joined by two experts at the heart of the debate.

André Bosschaart head of analytics for Montel. A warm welcome. Thank you. And Anton Tijdink, policy advisor, electricity market design at TenneT TSO, a warm welcome to you too.

Great. Yeah, thanks. And thanks for having me. Yes, I'd like really to start by asking you, André, so we're talking all about negative prices, big people being paid to use power.

That's obviously doesn't happen so much on the retail side, but it's certainly a wholesale market phenomenon that we've seen growing in, basically in, in more and more instance happening over, over the years. Now, in, in a recent analysis, you argued that weather patterns and renewable outputs, were still driving most of these kind of negative pricing events, rather than any sort of structural flexibility improvements. Can you what do you mean by that? André?

Yeah. So more and more I tend to think in three types of days that we can observe in the wholesale market. So where in the past all the electricity, let's say, was produced by fossil fuel generation, and the prices were, yeah, determined by those fossil fuel generations. We observe more and more days where if the sun is shining, we see, let's say low prices and negative prices.

So I call that the mixed days, but we also observe days in the wholesale markets where fossil fuel generation is not needed anymore, and that it's completely driven by renewables. There are some countries standing out in that. So for example the Nordics where we see a lot of low prices because of hydro, but also more to the south. In Spain we see more and more days where, yeah, fossil fuel generation is not determining the prices anymore.

What markets in Europe are currently experiencing the biggest shift in, in pricing behaviour that you're noticing André? Yeah it's typically, if we start with the Nordics, then it was Finland because they build a huge nuclear power plant and that resulted in lots of negative prices. And then we see more like the CWE area and Germany and Netherlands, Belgium and France and Spain have, yeah, high number of low end negative prices. So Anton why are some countries, in recent weeks we've seen levels of minus 500.

Why are we seeing these kind of prices in some countries, but not in others? So I think it has mostly to do with the amount of renewable capacity that is installed. Eh, once you go above certain thresholds, above your, your regular loads during the day in case of solar, then at some point you, you need a trigger in the market to also reduce your renewable output. And I think in these negative price hours, these are moments where you reach the tipping point of where you start to have excess power compared to your demand.

And since we need to have a balanced system, there needs to be a strong incentive then also to reduce the demand to reduce the generation or increase the demand. And since there is an increase in demand flexibility, but that's not that big. So you need to get that flexibility from your generating assets. And in the old system with a lot of gas high power plants, there was just a default there.

These gas plants, they were controlled and were effectively operated on these prices. But now, at times of high renewable power, we also need renewable power to balance the supply and demands on the system. So we'll come back to the demand flexibility later. I think Anton, but this is basically, you're saying negative prices are no bad thing because they're providing the market with a signal to, to stop producing.

Is that right? Yeah. I'm not very happy to discuss it. Is it bad or good.

But I find it a very fascinating phenomenon, huh? To look at it. And I think it shows we are moving towards the edges of the system. But what I find fascinating is that we have done some research where we really see markets adapting to these situations.

It, it feels a bit non-intuitive to, to have negative prices. But if we would dive a bit more into the drivers for this, it is also very logical that it happens. And I think as at least for a very long time in the transition, we will experience this phenomena. But that doesn't mean there aren't any developments.

No that, that's very interesting. What's your take here, André? Do you, negative prices come in for a lot of criticism, they're scaring away investors. Even the energy minister in, in Germany, Katherina Reiche came out recently and criticised this phenomenon.

What's your take? Is it, a natural signal to the market to stop produce? Or is it something more than that? I think it's definitely a signal that needs change.

Yeah. So in, in essence, the negative prices, we, we could say that electricity now is waste. You have to pay to get rid of it. But it does trigger a lot of installations to change.

So where we think about must run production wind and solar, but maybe also a nuclear power plant or any other waste power plant, for example. They would always produce well with these kind of price signals. They would start Yeah. Curtailing wind and solar.

We already observe it. That's happening a lot at the moment. But even I can imagine that the discussions on nuclear plants will arise like maybe we should make them more flexible and other must run facilities as well. So that will definitely help and is needed, yeah, to instal more renewables in the end.

So but André, why, for example we've seen a spate of negative prices across Europe recently, but not in others. What's the reason for that? You're talking about must run or is this something that, under some subsidy schemes, they just run regardless of the price? Is that one the reason why you've seen that?

Yeah, I always like to look at the fuel mix itself and what Anton already said. And what we have seen with the huge amount of negative price in the CW area is that the whole area had a huge surplus. So where typically normally you could export to country and group each other, that was not the case at all. And for example, in GB we never observe a lot of negative prices, but that is because there's not enough solar, let's say, to really get to low levels.

So where gas production still needs to produce. I also know that in, in Greece a subsidy is not granted if prices are negative, so parties start to curtail already earlier. And also, yeah the balance in Italy for example is still as such that, that yeah, you don't need to curtail. So it's really depending country by country if you really reach that tipping point that you can't export the excess production anymore.

Absolutely. So it's a combination of the fuel mix into connectivity and also then in terms of the subsidy schemes and how they are run. Anton, but would it be fair to say that Europe has added far more renewable generation than it has expanded and had grids and it hadn't grids and flexibility storage just haven't kept up. Yeah, I, a bit weird to say, but that there's a lot of nuance, I think to that.

Yeah, of course. In hindsight, yeah, you could argue that, that the build out of grids is a bit late. Might be true but I think still there's a lot going on there as well. But it's a fact that you can build renewables, especially solar much faster than you can build out the grid.

The question is also to what extent that is a problem, for a very long time we've built renewables in this sort of producer, forget state where we consider them must run, but they are perfectly controllable. I would definitely argue that renewables are a super well controllable source, and I think we see that more and more happening, and we should expand that more as well. So if we look at the value, of power, when there is an abundance of renewables, it's very low. So it would be my stance that for grid build out or the issues where we might not always be able to transport the power, shouldn't from an economic perspective not be a very big issue.

And from a technical perspective, also easy to manage because these sources are controllable. So yeah it's, there's a nuance picture here, I would say. Absolutely. That's what I'm putting it very simply here.

I'm simplifying a bit dumbing it down if you like, Anton, but I think that's the sort of core element here. That's maybe true, but are you also seeing that maybe renewable generators in your grid zone voluntarily curbing outputs? Or is that happening more and more? Is there a shift in behaviour?

Yeah, so I think, yeah, let's make the distinction between more commercial, bigger renewable power plants, like offshore winds and the larger solar farms. Yeah. They are commercially run, and I think most, if not all, these plants are at the moment controlled in, in control centres for market parties, and that means they have the technical capability to also not produce when they, when there is wind or solar are visible. And they, I think most, if not all market parties u utilise this capability.

Then there's another big source, and that's pretty big in the Netherlands. I think almost two thirds of our instal solar capacity is at households or company level where there's no control over this sort of, although some dynamic pricing suppliers are working on achieving this capability. But that's much higher. And they also reach the threshold far above our typical demand.

So the typical demand on a normal day in analysis, around 15 or 16 gigawatts. But I think the instal capacity in this distribution grids on smaller connections is already over the 20 gigawatts. So that means if it would all produce, which it doesn't because there's a lot of levelling out. Not everything is laid down south, but still there, it shows that it's surpassing way above the normal demand threshold.

And then the Netherlands is lucky to have around eight gigawatts of export capacity. If you add that or it's sometimes it's reaching the tipping point. And it's not only solar in the system. We also, we still need to create system stability.

Also thermal power plants. So if you add it all up, it reaches sort of the tipping point where it starts to become an issue that also these smaller connected renewables are not controllable. So I think the big step we need to set in the market, which suppliers are working on, but it's not that big yet, is to get controllability of the smaller solar assets and effectively manage them in moments where we might have an overp supply option in, yeah. Because I think obviously when it's when it's sunny or windy in the Netherlands, it's also gonna be sunny and windy in northern France and northern Germany as well.

So that's a, it's a, even though if you have that interconnect capacity, that may not help you that much, but There's a strong correlation there. Indeed. And that's also showing that other countries pick up this increase in solar. And so we get a very strong correlated Yeah.

What André was already saying. Yeah. In Northwestern European market that is converging at times of high solar peaks. Yeah.

So I'm hearing here, André, that we are wasting this electricity, we are losing control. What are the solutions here? André, on Anton has, suggested some or some ways in which that can be dealt with, but certainly the Netherlands, let's say it's becoming quite an issue. Is it not?

Yeah. If you really would do a step back and would look at a yearly fuel mix, let's say, then you will observe that there is a complete mismatch in, in producing with renewables and the demand that we have, and then especially for solar. So we are in the in, especially the the northwestern part we are producing in the summer with solar, and we need the power, the electricity in winter when heating up. So in that sense, if you really want to solve it and want to be net zero with emissions, yeah, you need to transport, let's say the solar from the summer to the winter.

Yeah. And at the moment there are no real solutions to that, especially. Yeah, exactly. You would need seasonal storage if you look at gas that, that would be the ultimate dream if we think about the climate.

Yeah. Then the way to do it might be a hydrogen production. At the moment that seems a bridge too far. We do not really observe a lot of projects over there.

The other solution then is just to solve it on the short term, so that is, yeah, curtailment, exports, reducing production demand, side response, and as well some storage with batteries. But I, I would maybe have a bit of a contrary view there that I would say we, we need more curtailment. Eh I had this idea once to to write an article, embrace the curtailment, because I think. If we look at the system, what we need to build is we need to, from a capacity perspective, we need to over plant solar and wind.

But then it means that we create an abundance of that power for a couple of thousand hours in a year where we have a, have an abundance of renewables. But that allows us, in other times, outside of these few thousand hours, we have much more renewable generation. So instead of viewing it as a waste, when we could deal it, we should see the added benefit of added renewable capacity for all those other hours. And it's relatively cheap.

And I don't wanna wave away all the concerns about the business case of renewables, but we need, if we look at our scenario analysis, what we need to build on wind and solar, we need to enter that stage where we have thousands of hours of curtailment in order for the benefits for all the other hours, we have much more renewables. And I think then the cheapest solution is not necessarily building more CapEx in batteries and other demands like response, which we should also do.

Eh, but there's it's relatively cheap to do it with over planting solar, wind. Anton, can I put it bluntly and say we should celebrate curtailments maybe? Is that Yes. Let's celebrate curtailment.

Let's be excited about it. That would be perfect. But Anton do you think then in terms of subsidy structures and and report the renewable support schemes? I what kind of incentive, what kind of role do they play?

Do you think they need to be revised, they need to be rethought or redrawn in terms of the market design here? I think the basis is pretty good for the current renewable support schemes, but they, I think they're being revised on the whole European notion that we need to move to two-sided contract for differences. I'm not a specialist in that, but I think our current SD plus scheme is relatively good. There is some critique also on how renewables are built on imbalances and to what extent that's really helpful.

But. And it does, I think the Dutch mechanism does give incentives to, to also not produce. And I think that's the essence for system balancing, that you don't create incentives where it doesn't matter. You just produce and forget, that, so these are the things we want to get out of the system.

So the basis is good, but it does allow for prices to reach its negative area, but it's not unlimited. And the unlimitedness comes mostly from uncontrollable renewables and the need to still have turmo power plants providing relevant system inertia and other stability services for the TSO. No absolutely. It's very interesting.

I think, and what people have said and it's very common to, to hear in the market this is perfect incentive for batteries, this is to bring in that kind of element of flexible, these negative prices. People get paid to fill up their storage units and then they get paid again when they have to deliver the power. Now André what, is battery optimization reshaping market behaviour or not? What's your take here?

At the moment? Not yet. So we can't observe it that, that, with the few batteries that are in the system, that we observe changes. And it's also very clear with the recent developments that, that we still observe more negative prices and even deeper.

Of course that might change in the future when we would have, yeah, more batteries in the system and that they really start to have an effect on, especially the prices when discharging, that there they are competing with gas fired power plants. And at the moment that they are pushing those out of the merit order when you might have an effect. But that's also the moment, yeah. Where really saturation would start and business cases get less profitable.

But that's still pretty far away in our view because the megawatt hours that are produced with gas fired power plants are still Yeah, a lot if day to day and are not that easily Yeah. Not needed anymore. So is that the answer, Anton? Is that just build more batteries, build up the battery capacity?

Is that one solution? I think adding battery capacity would definitely help. If there would be some sort of merit order or flex, I would definitely say flex renewables first, and then you at some point you reach an amount of energy for you where it becomes beneficial to also air shift demand, batteries in a very late stage, at least my opinion, you can think of maybe doing that with hydrogen or stuff like that. But there's so much more low-hanging fruits below that which could be economically viable much sooner which I think we should definitely aim for.

Yeah. So André where are the growth areas in terms of geographies in term for batteries? Are you seeing them, is that, where's, where are the key markets for battery operators? If we just look at the fuel mix, then Eastern and southeastern Europe are the places to be, because purely of out of the fuel mix in general we observe, yeah, good conditions also with solar.

And so we see a lot of days that are interesting for batteries, but also they compete with discharging with an older fleet of power plants, where in general, because of the older fleet of the power plants the prices in the peak, in the evening peaks and in the morning peaks are higher. So yeah. And that's where you benefit most as a battery with discharging in those peaks. So yeah, definitely those areas.

The Netherlands, in essence in, in this region, it has a good definitely a good balance. Let's say that, yeah, there's a lot of solar. There are a lot of mixed days that are profitable. So in the area, let's say of the CWE, then I would say Netherlands and Germany, though Netherlands with the higher grid fees, having an issue there on the transport cost, just purely looking at energy prices.

Then Netherlands is also a very good area. And for example, if you look more like south as Spain, there are so many days that the, let's say the peak prices are also very low because of renewables. That's a less interesting area. The same for the Nordics, where everything there is already a very nice storage, and that's called hydro.

So yeah there, yeah. I would not compete with a battery. But in those areas you'd co-locate batteries with solar or with wind or maybe all three? Yeah.

Yeah. That's what we observe a lot, eh? That, that batteries are, yeah put in what we call it, like a close distribution grid. So together with wind, solar, or a combination of.

And I think there's also this not so visible trend that we built a lot of batteries co-located with demand, but not necessarily for power trading benefits, but to solve the fact that a lot of consumers can't get a bigger grid connection. And then the battery is a relevant and a marketable investment just considering the fact that you can do more than, that's still expensive but that doesn't allow you a lot of options to trade because a, you have a limited good connection, but then the business case is different, so to say.

So Anton, do you, would you expect then how important do you think batteries will become over the next five years in reducing these instances of negative prices? It is not necessarily going to reduce negative prices, but it's going to at least if you have batteries in the system, they will definitely limit the effect or the depth of the negative prices. But it's not the only solution. And on top of that, I think there's a strong, this is case for batteries to not necessarily trade, but to solve issues around congestion more, but batteries are in that regard, very important.

And I also, and on that, I mentioned that the high grid tariffs, we are partly responsible for that. But I also think with, contrary to what the storage sector is saying, is the high grid tariffs does provide an incentive for co-location, either on the consumer side or the producer side. And I think from a systems allocation perspective, that is a, the right incentive to push batteries in the right location. Although there's never a right location for all situations, but it's at least providing a good incentive there.

So if batteries could, in some ways help to limit curtailment, André, but is there a case for saying that they could increase congestion if not placed correctly? Yes, potentially, yes. So in general, we would say that. Batteries help to reduce congestion.

Because if we think about it, when renewable penetration is very high, prices are low, and batteries want to charge, so they re that has a good effect. And the other way around, they, the demand is very high. Prices are high and batteries are going to discharge. But if we look a bit more at, let's say, the balancing or the quarter hourly prices at the moment, yeah, there are moments that although the load is very high in a quarter hourly shape shows Yeah.

Also moments that you would love to discharge even in a high price area. So yeah, in that case, they could potentially increase the congested area or the Yeah. I think what's typical in the Netherlands is that we will have this mix of solar wind. The solar wind are not located at the same locations.

And so we will get low or negative prices with high wind in the future. And what we see now with High Solar, but that will lead to completely different power flows. So a battery located close to solar will have a totally different impact and a relief or an added to congestion depending on the situation. So I would I strongly believe that we should shift the conversation on whether batteries solve congestion towards how do we steer and control batteries.

If we would only allow them to be dispatched according to system market principles, then they will both relieve and result in congestions. But as long as if we focus on how we will coordinate their dispatch or non dispatch also considering these grid issues, then we come to a solution where we could say, a batteries contribute to the relief of congestion, but just by default being a battery, they don't relieve congestions. Yeah. Anton, do you think that with all the congestion that we will still keep one price zone or that we will get more price zones and the Netherlands?

Netherlands are particularly Europe as well? Europe as well. There's diversified debate on that. I'm, I can live with both scenarios.

I'm more leaning towards we should not necessarily go to smaller price zones, but I know that there, there's a huge school thought that, that really thinks we would benefit from splitting billing zones. There are definitely benefits in splitting billing zones for dealing with congestions, but there are downsides to it for a marketing side, maybe stating a different there. So I think if I just look at the TSOs, you have like the balancing role of the TSO and the transport role of the TSO.

And the balancing role has always been linked with ancillary services, A-F-I-F-C-R, also to more like the wholesale balancing role that traders do. Do you believe that now it's really like a bit of separated the products of transport and wholesale ancillary service, do you think that it should be more integrated in the future to solve the congestion issue? It could be that we ended there, right? Then we think more all concepts, right?

Where you try to optimise transport capacity more with also trading, not discarding it. It's a nice idea. But I think we are, we have this past dependency of a billing zones European market. And our issues around congestion are, first of all, multifold, eh the congestion issues on the regional grids have a different character than the congestions on the high voltage grid.

So that's already an issue. You can't solve both with the nodal market, I believe. And we, like I said, there, we have this path dependency and we have the issues on congestion now. And the set of solutions we try to implement now, which should materialise now in, in the coming years, should already cover that in order to have a stable grid.

So a full change to nodo and optimising this air from the more engineering perspective, logical choice is going to require such a high implementation time that I doubt whether it's still necessary, if we succeed in the getting the right set of solutions that we need already in the next five to 10 years or in certain locations even already. And I think so, I'm sorry to interrupt there, Anton. I think that's absolutely crucial and also that debate is very political, isn't it? Price zones dividing into smaller price zones, nodal pricing.

We've seen it happen in Germany, in the UK and eventually, the politicians decide on the big bigger price zones for whatever reason or for several reasons. But a final question, gentlemen. So André, if I can start with you. So by let's say 2032, will we still be seeing the same amount of negative prices, if I would say if it's negative or zero?

So let's also include the zeros in this discussion then I will guarantee that there will be more low prices than we currently observe because we will continue to increase the renewable production, especially also in Netherlands with all the offshore wind plans. So we will also get more low prices from those. So low prices definitely a yes. Yes.

Okay. And over to you Anton. What's your view here? Yeah, I think we will have structurally negative prices, but I think what, what's happening behind the negative prices for the volumes of renewables offered will definitely increase more.

And I think that will be a good thing. Yeah, it's gonna be a bumpy ride, but I think in general it's not necessarily a bad thing. And we, one thing maybe is for certain, we may not see the depths of the minus 500 or the minus eight hundreds, but certainly many more instances of such low and negative prices. But Anton and André, thank you very much for being guests on this week's plugged in podcast.

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