Disclaimer: Views in this blog do not promote, and are not directly connected to any L&G product or service. Views are from a range of L&G investment professionals, may be specific to an author’s particular investment region or desk, and do not necessarily reflect the views of L&G. For investment professionals only.
Negative power prices – a European phenomenon
Last year, we hosted a webinar in partnership with NTR exploring the phenomenon of negative power prices in Europe. Here, we recap the key findings of that discussion.
What are negative power prices?
Negative power prices arise when there is an imbalance between supply and demand in the electricity market. The result is that prices fall below zero.
In practice, it means the end user effectively gets paid to consume excess electricity, while generators must pay to export and supply this.
Where are they having the biggest impact and why?
Although not a new market phenomenon, the prevalence of negative power prices has increased and spread across Europe since 2023, particularly in the Nordics, Benelux and Spain[1].
Every country has its nuances, depending on the generation mix and the transmission capability of the grid. Primary factors include high deployment of renewables alongside delayed electrification of heavy industries. Inflexible grids, dependence on conventional power plants for system stability, and periods of low seasonal demand are also likely to have an impact.
Who is affected by negative prices?
Negative prices may be a particular concern for renewable energy suppliers. They could mean these organisations can’t easily regulate or store their renewable energy source.
What can be done to mitigate negative power prices?
While negative prices are expected to continue in the short term, there are certain strategies renewable energy generators may be able to pursue to mitigate their impact.
Firstly, knowing break-even points (BEP), can allow generators to recognise when to self-curtail renewable assets.
Secondly, renewable energy generators may be able to lower their break-even points through:
(i) securing fixed incremental revenues from forward trading of renewable certificate volumes
(ii) re-negotiating existing Power Purchase Agreements (PPAs) and new PPAs to include settlement mechanisms during negative price periods
(iii) negotiating innovative contract structures
(iv) re-negotiating project contracts with operational costs directly linked to generation
(v) taking advantage of support scheme mechanisms where available.
Are there certain technologies or infrastructure that can help to alleviate the problems of power prices going forward?
Yes, there are infrastructure solutions such as investment in the grid, grid-supporting technologies and the electrification of heat.
These have the potential to support the energy transition and reduce the likelihood of negative prices occurring. It’s anticipated they will be adopted on a more widescale basis over the coming years.
You can listen to the full webinar here.
Assumptions, opinions, and estimates are provided for illustrative purposes only. There is no guarantee that any forecast will come to pass.
Whilst L&G has integrated Environmental, Social and Governance (ESG) considerations into its investment decision-making and stewardship practices, this does not guarantee the achievement of responsible investing goals within funds that do not include specific ESG goals within their objectives.
[1]‘Europe saw record surge in negative power prices in 2025’, Bloomberg, January 2026
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