Analysts: Negative electricity prices in France to persist at least until the end of the decade

France is facing a significant increase this year in the number of hours when electricity prices fall below zero. Analysts say this trend is likely to persist at least until the end of the current decade, or even beyond. Some expect negative-price periods to become even more frequent. They say tighter regulation, particularly of subsidies for renewables, could limit the occurrence of negative prices.

France’s short-term electricity market is seeing an increase this year in the number of hours when prices fall to zero or below. While this happened for 184 hours last year, the figure has reached a record 543 hours so far this year, and the year is not over yet. Analysts contacted by news website Montel say the trend is likely to continue as the use of renewables expands.

Jean-Nicolas Hutin of consultancy Afry told the website that the number of hours with negative prices should stabilise between 2030 and 2040. It should then decline as large-scale battery storage is used more intensively and green hydrogen is produced.

According to Margarita Flores of LSEG, the number of hours with negative prices will range from 475 to 658 per year between 2025 and 2027. By 2030, however, they could occur for nearly 800 hours a year. Negative prices are not sustainable, however, because they deter investment in new generation. “No one invests at the electricity prices that renewables are achieving by selling on the market this year,” said Gabriele Martinelli of LSEG.

“Regulation can do a lot... the system as a whole has no interest in negative prices,” Jean-Nicolas Hutin told the website, adding that the main goal is to ensure negative prices “do not deter investment in renewables”.

Generous support for renewables as the main cause

According to Gabriele Martinelli, generous support for renewable energy is the main cause of negative prices in France. This is because it does not incentivise operators of these sources to curtail their output. Another factor is the influence of neighbouring countries that are also facing negative prices, such as Germany and the Netherlands.

Although French nuclear power plants can partly reduce their output, they do not fully offset the downward price pressure caused by surplus electricity. Historically, Martinelli said, they have reduced output by only 15 to 20 GW during periods of surplus electricity.

The cross-border factor mentioned above could be addressed through regulation in neighbouring countries. In Germany, for example, new renewable energy installations that have secured support since 2023 are not expected to receive any compensation during periods of negative prices from 2027. A lower number of hours with negative prices in Germany should therefore also have a positive impact on the French market.