Britain’s seven-fold increase in negative prices an opportunity for big batteries – analyst

According to data from energy market analytics company Aurora Energy Research, negative price periods in Britain were six times more frequent in 2024 than in 2022.

In a report, the firm said it attributes the rising frequency of negative prices to oversupply conditions, thanks to robust renewable output thanks in part to economic incentives and subsidies, plus weaker power demand. Through both improved efficiencies and declining industrial and commercial energy consumption, energy demand since 2010 has been down 20%.

Exact figures vary between reports and agencies. In September 2024, UK-based Modo Energy, a battery analytics platform developer, reported that 149 hours of negative pricing in Great Britain were experienced in 2024, up from 107 hours in 2023 and 29 hours in 2022. A sixfold increase from 29 hours implies an end figure of 174 hours for 2024.

BloombergNEF reported that Germany leads all major industrialized countries in Europe in the number of hours with negative electricity prices, reaching 468 hours in 2024. That was 60% more than in 2023, a year earlier.

A spokesperson for Aurora shared the following UK data on negative hours

• 2022: 19 hours
• 2023: 86 hours
• 2024: 139 hours

Legacy schemes at play

Aurora explains that both subsidy schemes and early Contracts for Differences in the UK can contribute to negative pricing. They may incentivize legacy generators to continue producing electricity even when demand is low, driving prices down.

The report said:“The formation of negative prices is particularly driven by renewable assets supported by legacy subsidy schemes such as the Renewable Obligation (RO) scheme and early-round Contracts for Difference (CfD). These subsidies allow assets to receive financial support even during periods of negative prices, removing the economic incentive to curtail generation in times of oversupply. Current CfD contracts no longer offer subsidy support during periods of negative prices, thereby improving the economic incentive for assets to respond to price signals and reduce output during periods of oversupply but also increase the risk exposure of assets.”

Pranav Menon, research associate at Aurora Energy Research, also made a broader comment on how this is impacting developers:

“The increase in the number of negative price periods in the GB power market this year has caused significant concerns among developers and investors about the future profitability of renewable investments. Maintaining a conducive investment landscape for renewables requires an acceleration in the pace of electrification in sectors such as heat and transport, which is key to delivering economy-wide Net Zero, as well as focusing on improving system flexibility through storage.

Battery hopes

Aurora’s report details the obvious need for “improving the flexibility of the power system,” through flexible, price-responsive sources of demand, including long-duration energy storage systems.

The National Energy System Operator (NESO) in Britain detailed necessary steps to achieve a clean energy grid by 2030, which included a call for battery storage capacity to rise from the current approximately 5 GW installed to between 23 to 27 GW and long-duration energy storage to increase from 3 GW to 5–8 GW.

The system operator called for 2.6 GW to 3.2 GW of new batteries annually, and hopes to see a reduced the grid connection queue to support the rollout of renewables and storage.

Update: This article was updated to reflect additional data from Aurora Energy Research, sent after publication.