The Future of Energy Market: How Renewable Energy is Shaping Negative Electricity Prices

The energy landscape is rapidly evolving, with renewable energy, particularly photovoltaics, at the heart of this transformation. The rise of solar energy is accelerating the transition to greener electricity, but it also brings new challenges, and one of them is price volatility.

As PV production surges, especially during sunny midday hours, the amount of electricity produced can sometimes exceed demand, resulting in supply surpluses. This causes negative prices, where electricity is sold at a price below zero. This phenomenon occurred significantly more often in 2024 compared to previous years and is expected to continue growing in the coming years.

Evolution of hours with negative prices in the Swiss electricity market between 2015 and 2024. Each point represents one year (in 2022, only one negative price was observed despite 4000 GWh of solar production, due to that year's price surge in the European market).
Source: ENTSO-E / Swissgrid

A Glimpse into the Future

Our analysis of historical electricity market (source) and PV production data (source) applying a machine learning model suggests that if current trend continues, negative price hours could represent over 25% of total annual hours by 2035, which is a huge jump from 3% in 2024.

Prediction of hours with negative prices in the Swiss electricity market over the next 10 years (based on extrapolation of increasing photovoltaic production).

One potential solution is voluntary reduction of solar production (curtailment). However, it may lead to inefficiencies in renewable energy integration. To better manage these new energy flows, flexibility measures will be essential: energy storage, smart demand management, and dynamic pricing, supported by appropriate policies and incentives.

The challenge is to successfully manage this transition while maximizing the value of renewable energy for both producers and consumers. As we continue our research into this growing trend, we are exploring how new technologies and strategies can contribute to a cleaner and more sustainable energy market.

Sources and Links

• Electricity market data: ENTSO-E Transparency Platform
• Solar production data in Switzerland: Federal Office of Energy (UFE)
• Historical data on negative prices: Swissgrid