Explaining the emergence and expansion of negative electricity prices across Europe

Negative electricity prices have become increasingly frequent across European power markets in recent years, raising critical challenges for market participants, policymakers, and researchers. While much of the existing empirical literature has focused on Germany, where negative prices first appeared in 2008, this study systematically analyzes and compares their drivers across 20 European electricity markets. Using hourly data for the period 2015–2024, we employ both country-specific and panel logistic regression models to identify the fundamental determinants of negative price events. The results reveal broad commonalities across markets, complemented by notable country-specific deviations. Negative prices exhibit strong persistence and pronounced seasonal patterns, while higher electricity demand systematically reduces their likelihood. The generation mix proves decisive: higher combined wind and solar generation is positively associated with the probability of negative price, whereas the effects of other renewables (e.g., biomass, geothermal, hydro) vary by country. By contrast, non-renewable generation is generally associated with a lower probability of negative prices, although the strength of this relationship varies across countries, while the role of cross-border electricity flows remains heterogeneous and context-dependent.