“Free” electricity is available more often than ever. This year already more often than in all of last year

Negative electricity prices on the Czech day-ahead market occurred for a total of 182 hours in the first half of the year. Thus, in the first half of this year alone, there were substantially more of them than in the whole of the previous year, when negative electricity prices occurred for 134 hours. Last year was already a record year in terms of the number of negative prices. 

Negative electricity prices have returned to the Czech Republic in full after the energy crisis. During the years of the energy crisis, namely in 2021 and 2022, negative prices almost disappeared. There were 33 such hours in total in 2021 and only 8 a year later.

However, as electricity prices on wholesale markets fell, negative prices returned to the market. Their number was already record-breaking last year. In order to be able to feed electricity into the power system at all, generators had to pay for doing so in a total of 134 hours.

A further substantial increase is also visible on the day-ahead electricity market this year. In the first half of the year, there were a total of 182 hours in which the price fell into negative territory. Buyers on the day-ahead electricity market were therefore actually paid in all of those hours.

There were as many as 217 hours of “free” electricity, including hours when the electricity price was zero. 7 April this year was entirely exceptional in this respect. On the first Sunday in April, electricity could be consumed free of charge, or consumers could be paid for taking it, for as many as 16 hours.

Although negative electricity prices are beneficial for consumers, they are generally a rather negative phenomenon in the energy sector. Negative electricity prices point to insufficient flexibility of generation sources in the system, as power plant operators prefer to keep a plant running even though they must additionally pay for the electricity supplied to the system.

For investors, negative prices are rather an unwelcome complication that worsens investment returns. Put simply, the higher the electricity price, the faster the return on investment in a generation facility.

At present, when the energy sector not only in the Czech Republic requires substantial investment to transform energy systems from fossil fuels to low-emission sources, negative prices (or low electricity prices in general) may therefore do more harm than good in the energy sector.