Surging renewable output overwhelmed Europe’s power grid in 2025, driving electricity prices below zero more often than ever before.
Negative power prices are underscoring how rapid growth in renewable generation is colliding with stagnant demand and persistent grid constraints in Europe. Germany logged 573 hours of negative prices in 2025, a 25% increase from the previous year. And Spain, which experienced negative prices for the first time in 2024, has since seen them double year-on-year.
When strong winds or abundant sunshine flood the system with renewable power, demand is often insufficient to absorb the surplus, pushing electricity prices into negative territory. This pattern is set to continue in 2026, according to BloombergNEF, as renewable capacity continues to expand faster than grids, storage and consumption.
The growing frequency of negative prices is reshaping Europe’s power markets, squeezing revenues for renewable developers while creating fresh opportunities elsewhere. Trading houses, in particular, are increasingly betting on battery storage, buying electricity when prices fall below zero and selling it back during periods of scarcity. The strategy allows them to profit from the widening price swings caused by the weather-driven nature of renewable supply.
Meanwhile, grid upgrades to move electricity to where it is needed — along with battery storage to hold excess power for later use — are lagging behind the pace of new generation.
Despite the rapid expansion of renewables, fossil fuels remain a critical part of the power system, providing backup when wind and solar output falter. During those periods, prices can spike sharply. Limited transmission capacity, insufficient storage and a lack of flexible demand mean that the weather dependence of renewables is translating into more frequent sub-zero prices during oversupply, alongside steeper price surges when supply tightens.
“These price spreads are likely to persist in 2026,” said Florence Schmit, energy strategist at Rabobank. “The push for more renewables will be met by slowly returning power demand and an increased potential for gas and coal in some markets to meet additional load.”
Photograph: A street lamp near residential apartments in Berlin, Germany, on Thursday, Nov. 27, 2025. Photo credit: Krisztian Bocsi/Bloomberg
Copyright 2026 Bloomberg.
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