There is a surplus of renewable energy in Europe and the wholesale electricity bill is negative

Electricity supply is increasingly outstripping demand in Europe as renewable energy capacity grows, making negative prices a more frequent occurrence.

At the beginning of 2020, installed solar energy capacity in Spain totaled almost 9 gigawatts, according to data from Red Eléctrica. By early 2025, it had soared to 32 GW, driven by subsidies.

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With solar panels and wind turbines installed in more places — while energy storage capacity still lags behind — an especially sunny day with strong winds can generate more electricity than needed, pushing prices below zero.

By September, the number of hours with negative electricity prices in Spain had already exceeded 500 year-to-date, more than double the total for the entire 2024. Likewise, in France hours had already surpassed 400, also above the 2024 total, and Germany was on track to do the same.

These rates are from the wholesale electricity market, meaning traders have to pay someone to receive surplus power, rather than the other way around.

This does not mean that households are also paid to consume electricity, because these rates are usually set in advance. But negative prices may end up being felt in markets with more dynamic pricing regimes.

In fact, electricity prices for households in the European Union during the first half of the year were 1.5% lower than in the first half of 2024, according to data published in October. Excluding taxes paid by Europeans, prices fell more sharply and have been falling since 2023, after spiking in 2021 and 2022.

In contrast, rising electricity prices in the United States have become a growing source of voter dissatisfaction as utilities rush to build more capacity to meet exploding demand from AI data centers.

The higher bills have fueled an overall cost-of-living crisis that began with the post-pandemic inflationary surge and was worsened by President Donald Trump’s tariffs.

Although the annual rate of inflation has cooled sharply since peaking in 2022, consumers are still feeling the cumulative impact of price increases over the past five years and are demanding lower prices, not just slower increases.

The most recent consumer price index data, released in early December, showed that electricity prices in November were 6.9% higher year-on-year, without seasonal adjustment.

It is worth mentioning that negative electricity prices also occasionally occur in the United States, including in Texas, which has a more deregulated grid and large wind energy capacity.

But the Trump administration is cracking down on renewable energy, scrapping subsidies for solar power and shutting down wind energy projects.

And negative prices in Europe are not helping the energy industry there, as they put pressure on producers’ profits and solar plant valuations.

Countries are racing to scale up battery storage. But in the short term, the challenging pricing environment has chilled the development of new solar capacity, even where land, permits and grid access are already secured.

“The market is flooded with ready-to-build projects that developers want to sell as they are no longer good enough in the current market,” a senior executive at a company that owns solar plants in Spain told the Financial Times.