Negative electricity prices, a side effect of abundance

Episodes of negative electricity prices are increasing in France, a paradoxical phenomenon inherent to a system where production is much more abundant than consumption, which ultimately benefits users, explains one of RTE's leaders in an interview with AFP.

At a time when negative electricity prices are sometimes criticized as a sign of overproduction costing the State, which has to compensate producers, the head of RTE assures that this abundance is "a shield for the consumer".

While the war in the Middle East is driving up the price of gas and oil, "the price of electricity in France has been very stable since the beginning of the Hormuz crisis," notes Thomas Veyrenc, Director General of Economics, Strategy and Finance at RTE, the company that manages the high-voltage network and is responsible for maintaining the balance of the system.

During the previous energy crisis, in 2022-2023 in the wake of the Russian invasion of Ukraine, EDF's nuclear production was limited by the crisis of corrosion of the piping of power plants, hydroelectricity was suffering its worst drought since 1974 and fears of gas shortages for thermal power plants caused electricity prices to soar.

The opposite is true today: France has a surplus of electricity. And it exports a lot of it, worth 5 billion euros in 2025.

"The world has completely changed," summarizes Thomas Veyrenc. "We are much more protected today."

But this abundance is accompanied by the phenomenon of negative prices, mainly in the spring, when high electricity production combines with low consumption, particularly during the May bank holidays.

And since the supply and demand of electricity must always be balanced at any given time, this overproduction results in a drop in prices on the markets, even entering negative territory.

However, the phenomenon has intensified in recent years and sometimes takes on a spectacular character.

On May 1st, the price reached a record low of -498 euros per megawatt-hour (MWh). But generally, these dips into negative territory are small.

Abundance has "many virtues"

For Thomas Veyrenc, while the rise of renewables is sometimes called into question, it is counterproductive to focus on negative prices in themselves: "what interests us is the volume of negative prices", and the signal it sends about the low level of consumption compared to production.

Over the period from January 1st to May 27th, RTE recorded 306 hours of negative prices in 2026, ten times more than in 2023 (24 hours). These episodes lasted an average of 5 hours, and 50% of prices were very slightly negative, between €0/MWh and €0,01/MWh.

For the rest, they averaged -3,2 EUR/MWh from January 1 to May 27, 2023 and -20 EUR/MWh in 2026, over the same period.

This phenomenon is accentuated by the fact that the demand for electricity "is not progressing at all", emphasizes Thomas Veyrenc.

Negative prices occurred earlier this year, as early as February. "That's atypical, that's new," he notes. "It may be linked to weather conditions, but it clearly means that the phenomenon of abundance or overcapacity has intensified."

Problem: this costs producers, who have to pay to sell their electricity, and the State, due to the costs associated with compensating producers receiving public support.

Solutions exist: modulation of electricity production, battery storage and incentives to consume during peak production times through off-peak pricing - particularly for charging electric vehicles.

Until now, it was primarily nuclear and hydroelectric power that adjusted their production to absorb these episodes of overproduction. Now, all electricity producers must reduce their output.

"Since January 1st, all means of production, including renewables, if they are greater than 10 MW, have the obligation to participate in what is called the adjustment mechanism," explains Thomas Veyrenc.

Ultimately, the solution lies in accelerating the electrification of uses (industry, buildings, transport and data centers), he argues.

This is the plan launched by the government.

"When you undertake an electrification effort, being in a situation of abundance has many virtues," he observes, noting that France benefits from much lower prices than Germany, Italy, the United Kingdom or Belgium.

Illustrative image of the article via Depositphotos.com.