Negative electricity prices: is power ever free?

How often prices go negative

Negative prices have become more common in Finland as wind power grows. They usually fall on windy nights, weekends and the spring flood season, when hydro output is high too. Our archive covers about two months of quarter-hour prices and grows daily. Over the last 62 days a negative quarter occurred on 3 days. Daily prices are on the monthly prices page and the exchange’s own price service.

At what spot price the all-in price hits zero

The table shows how deep the spot price would need to fall for a consumer’s all-in price to reach zero. The dearer the transfer, the deeper. Such prices are rare, so for a consumer a negative spot price in practice means cheaper than usual electricity, not free.

Electricity tax does not flex

Electricity tax and the security-of-supply fee, 2.9179 c/kWh per kilowatt-hour according to the Tax Administration’s table, are charged on every kilowatt-hour whatever the spot price. So is the transfer fee. That is why a negative price helps a consumer less than the spot figure suggests.

Negative prices and your own solar power

For solar producers a negative price is bad news: selling to the grid can cost money if the sales contract follows the spot price. Many contracts and inverters allow export to be limited in negative hours. Using your own output, for example to heat the water heater, is then the better option. Motiva explains demand-flexibility options.

Preparing for negative hours

Tomorrow’s prices come out in the afternoon, so negative hours show on the tomorrow page the day before. Time the car charging, washing and water heater for them. The cheapest time guide explains when cheap hours typically fall.

Why producers pay to produce

A negative price sounds odd but has a clear logic. Some plants cannot stop and restart quickly or cheaply, so running through a short negative spell costs less than shutting down. Some wind output is sold on long contracts that pay per unit produced, so continuing can still pay at a slightly negative exchange price. When supply exceeds demand and the surplus cannot be exported, the price drops below zero. The situation often corrects itself: flexible demand rises and some output stops, and storage such as batteries and electric boilers buys power at exactly such moments.

Your contract terms decide

Not every spot contract passes a negative price on unchanged. Some cap the energy price at zero, and some always charge the margin. Check your terms if you want to use negative hours. On a fixed-price contract a negative spot price does not show at all.