This scene recalls what happened in April 2020 in the US oil market, when prices plunged into negative territory for the first time in history due to collapsing demand and stockpiling amid weeks of economic chaos triggered by the COVID-19 pandemic. At that time, companies had to pay others to take barrels of oil they had committed to buying before prices returned to positive territory. While this was an exceptional case, negative prices have become a recurring and expanding phenomenon in some electricity markets. The most prominent example is Spain, which witnessed 404 hours of negative electricity prices during the first five months of this year, according to data from consulting firm Enervis. This phenomenon has been increasingly spreading across much of the continent.

Meanwhile, demand for electricity from the European grid has declined due to a combination of factors including economic slowdown, efforts to improve energy consumption efficiency, especially after the outbreak of the Russia-Ukraine war, alongside the expansion of rooftop solar panel use supported by government incentives. This has led developers and investors to express growing concern over potential financial impacts during the past year, as confirmed by Rishab Shrestha, senior analyst at Wood Mackenzie for European electricity markets consulting. Therefore, Rebecca McManus, head of European renewable energy at Aurora Energy Research, expects negative prices to disappear from the market by 2035 but emphasizes that demand growth alone will not be sufficient to stabilize the market, and policymakers must play a pivotal role in the coming phase.

This was a key part of China’s success in reducing production curtailment levels a decade ago, despite the problem reemerging in the past two years due to the grid’s inability to keep pace with production growth. European policymakers have succeeded in stimulating investment in renewable electricity production, but the time has come to broaden their focus to include other elements of the low-carbon energy equation.