Why Power Prices Can Go Negative and What It Means

From mountain-top wind turbines in Norway to rooftop solar panels in Australia, renewable energy is flooding into power networks like never before. Because the output from these new sources fluctuates with the changing winds and the movement of the sun, they often deliver more electricity than grids can absorb, leading to the curious phenomenon of “negative” power prices.

This year is likely to see a record number of hours when the price of electricity dips below zero. While all that cheap power can be good news for households and industries, it’s a serious concern for investors in renewable energy assets, as the volatility in prices is a threat to steady profits.