German electricity prices fall below zero euros

On January 2, Eastern Time, due to the high wind power generation of 40 GW, far exceeding the demand at the time, the German overnight market once again saw negative electricity prices for 4 hours, and power generators had to pay users to consume excess electricity.

With the rapid growth of wind and solar power generation capacity, many European countries experienced record negative electricity price periods in 2024. According to data from the European Power Exchange (Epex Spot), as Europe’s largest electricity market, Germany had negative electricity prices for 468 hours in 2024, an increase of 60% year-on-year. France’s negative electricity price duration doubled to 356 hours in 2024, and Spain had negative electricity prices for the first time in 2024, with a total of 247 hours throughout the year.

According to data from the industry organization Eurelectric, throughout the European Union, negative electricity prices occurred 17% of the time in the so-called “bidding area”. The bidding area refers to a geographical area where electricity prices are determined by a market bidding mechanism. The supply and demand relationship directly affects electricity prices. If supply exceeds demand, prices may fall or even become negative.

Frequent negative electricity prices have sparked political controversy. Some politicians have called for cuts in subsidies for renewable energy generation, because even when there is insufficient electricity demand and excess electricity generation, the government still needs to pay minimum subsidies to generators.

At the same time, the impact of weather changes on the electricity market has further exposed the volatility of renewable energy generation. Last month, Europe experienced several days of windless weather, which caused wind power generation to stagnate, followed by a surge in power generation due to strong winds. This instability has put higher demands on grid management and highlighted the challenges in energy transformation.