The long hours of sunshine at the weekend caused the wholesale electricity price to slide deep into negative territory at times. What may sound like good news to many at first glance is, on closer inspection, a real warning signal for the market, the grids and taxpayers.
Because negative wholesale electricity prices do not simply arise because energy would suddenly be sensibly usable in abundance. They arise when too much electricity is produced at the wrong time, demand is too low and storage facilities, grids or flexible consumers are insufficient. Negative electricity prices show exactly what is rarely stated honestly in the energy transition: production alone does not create security of supply.
For a long time, the energy transition was presented as if all that was needed was to build enough wind turbines and solar installations, and electricity would automatically become clean, cheap and secure. Reality, however, is more complicated. Energy is not only a question of quantity. It must be available at the right time, in the right place and in the right form. If it is not, supposedly cheap green electricity becomes an expensive disposal problem.
Negative wholesale electricity prices are not a gift
A negative electricity price means that electricity providers on the wholesale market have to pay money so that someone will take it off their hands at all. Prices always have a signaling effect: if they rise, a good is scarce or in high demand. If they fall, there is more supply than demand. If the price even turns negative, the signal is especially clear: supply no longer matches demand.
That is exactly what happened at the weekend: a lot of wind and sun met weak demand. On public holidays or weekends, less industry is running, many companies are idle and households do not consume enough either to absorb the generation. At the same time, photovoltaic and wind power plants feed in large quantities. Fossil-fuel power plants, biomass plants or other generators cannot always be ramped down quickly enough, or they have technical and economic reasons to continue operating. The market then actually sends a clear signal: electricity is not needed right now.
According to Tagesschau, Germany had at least 525 hours with negative electricity prices in 2025. Netztransparenz, the joint platform of the transmission system operators, reports 557 or 518 relevant negative-price hours for 2025, depending on the EEG rule. These are not outliers. They clearly point to a structural problem. Last weekend, prices were at times as low as minus 480 euros per megawatt hour. On May 1 (Labor Day), the technical lower limit of minus 499.99 euros per megawatt hour was even reached. Converted, that is almost minus 50 cents per kilowatt hour.
A market in which electricity is disposed of at midday with money added and can be expensive again just a few hours later sends a clear signal: flexibility is lacking.
How the electricity price is formed in Germany
To classify negative wholesale electricity prices correctly, one has to understand how they are formed in the first place. The so-called merit order principle applies on the wholesale market. Put simply, power plants are sorted according to their ongoing generation costs. The cheapest providers come first, then the more expensive ones. In the end, the price is determined by the most expensive power plant that is still needed to meet demand. At first, that sounds logical. If very cheap generators are sufficient, the price remains low. If expensive gas-fired power plants have to be added, the price rises. The last power plant needed therefore sets the price for everyone.
This is precisely where the contradiction arises. Wind and solar power have very low ongoing costs. Once the plants are in place, sun and wind cost nothing. That is why they push down the wholesale price on sunny and windy days. In normal situations, that makes sense. Expensive power plants are displaced and the market price falls. The effect tips over when too much electricity pushes into the grid at the same time. Then cheap generators do not only displace expensive generators; at some point they also displace themselves. The market says: there is enough. More of it has no value at this moment.
Electricity is not a sack of potatoes that can simply be stored. Electricity in the grid must be in balance every second. Generation and consumption have to match. If more electricity is produced than is needed, either production has to be reduced, consumption increased, or the electricity exported or stored. If that does not succeed sufficiently, the price falls into negative territory.
The wholesale price then no longer indicates “cheap energy“, but overproduction at the wrong time.
The EEG surcharge: what it actually was
This is where the EEG surcharge comes into play. The EEG is the Renewable Energy Sources Act. It was intended to promote the expansion of wind power, solar energy, biomass and other renewable energies. Operators of such plants received fixed remuneration or a market premium for years, which was intended to make investments cheaper and more predictable.
The EEG surcharge used to be the mechanism by which this support was financed. Electricity customers were supposed to pay it through their electricity bills. In simplified terms, it worked like this: renewable energy producers received guaranteed or politically defined remuneration. The electricity was sold on the exchange. If the wholesale price was lower than the promised remuneration, the difference had to be compensated. This difference was redistributed to consumers through the EEG surcharge. A simple example: a plant is entitled to 10 cents per kilowatt hour. On the exchange, however, the electricity only brings in 4 cents. Then 6 cents are missing. These 6 cents had to be paid through the support system.
Since mid-2022, the EEG surcharge for electricity customers has been zero, and since 2023 the promotion of renewable energies has no longer been financed directly through the EEG surcharge on the electricity bill, but from the federal budget. What initially sounds like relief is in truth, as so often in politics, merely different packaging.
The costs have not disappeared. They have only been shifted. Previously they appeared on the electricity bill as the EEG surcharge. Today they end up in the federal budget and therefore with taxpayers. For 2026, the EEG financing requirement amounts to more than 16 billion euros, making it a huge expenditure item in the state budget.
Cheap generation does not automatically make the overall system cheap
It is often said that wind and sun are the cheapest sources of electricity. That is true in a narrow technical sense: once the plants have been built, the ongoing costs are low. But it does not automatically follow from this that the entire electricity system becomes cheap. Because an electricity system consists of more than generation. It needs grids, storage, reserve power plants, balancing energy, redispatch, digitalization, controllability and safeguards for dark doldrums. If a kilowatt hour of solar power is cheap at midday but unavailable in the evening, the system still needs a solution for the evening.
And this is exactly where the error in thinking lies. Individual types of generation can be cheap while the overall system remains expensive. In Germany, cheap and expensive generation are interwoven through various mechanisms. On the market, the most expensive power plant still needed often sets the price. Through support mechanisms, generators are protected whose electricity is temporarily worth little or nothing on the market. Grid charges distribute the costs of transport, interventions and infrastructure. EEG difference costs are paid through the federal budget. In short: through taxes and levies, everyone participates in the end.
This is no longer a market economy in the classical sense. It is a politically reshaped system in which prices still send signals, but these are constantly cushioned, redirected or corrected afterwards. When prices are high, politicians intervene with relief measures. When prices are low, support claims remain in place, and when security of supply is lacking, new power plants are to be subsidized.
The result is a system in which almost every weak point is covered over with a new payment.
Why taxpayers foot the bill
Negative wholesale electricity prices are problematic for taxpayers because they can increase difference costs. If electricity on the exchange is worth nothing or even has a negative value, but certain plants still have a claim to support, the gap becomes larger. The market then says: this kilowatt hour is currently worthless, while the support system says: this kilowatt hour is nevertheless paid for. In the end, the general public pays the difference.
That is the decisive point. It is not about whether individual households with dynamic tariffs can earn a few euros on a sunny Sunday. For these households, that may actually work. Anyone who has an electric car, a wallbox, a smart meter and a dynamic tariff can use such hours. But that is not the overall balance. If individual consumers are paid to consume electricity while support costs, grid interventions and system costs rise at the same time, the bill simply reappears elsewhere.
It becomes especially unfair because many people cannot use these advantages at all. Tenants without a wallbox, households without a smart meter, people without an electric car or heat pump have few or no opportunities to deliberately shift their consumption into negative-price hours. They hardly benefit directly, but indirectly share the costs through taxes, levies or future electricity prices.
The Solar Peaks Act is an admission
The fact that the state is now taking countermeasures shows that the problem has been recognized. With the Solar Peaks Act, it was stipulated that new photovoltaic installations commissioned from February 25, 2025, will no longer receive feed-in remuneration under certain conditions when wholesale electricity prices are negative. At its core, this is an admission: it was wrong to subsidize feed-in regardless of the actual market value.
If electricity has no value at a particular moment, the system must not pretend that every kilowatt hour fed into the grid is automatically valuable. Otherwise it is not security of supply that is being supported, but mere feed-in. That is a huge difference. However, this reform does not solve the entire problem. Many existing plants continue to operate under old rules. In addition, the fundamental question remains of how Germany can create an electricity system that not only looks green in the annual balance, but works in every hour.
Prices are always warning signals
The reference point is the same as with price brakes. Prices are not simply evil, inconvenient or socially cold. Prices are signals. They show scarcity, oversupply, misplanning and investment needs. When gas becomes expensive, the price says: this energy source is scarce or politically risky. When electricity turns negative, the price says: this generation does not currently match demand. In both cases, the signal is unpleasant, but valuable.
Politicians often try to soften such signals. When prices are high, caps are introduced. When prices are negative, support rules are adjusted, transition periods created or costs shifted into the budget. In the short term, that calms things down. In the long term, it weakens the market’s most important function: making undesirable developments visible.
Without honest prices, a system acts blindly. Then production continues even though there is currently no need. Then plants are built even though the infrastructure cannot keep up. Then costs are shifted from the electricity bill into the federal budget and sold as relief.
The problem does not disappear. It only becomes more confusing.
What a functioning electricity market would have to achieve
A functioning electricity market would not have to treat every kilowatt hour the same. It would have to distinguish when electricity is valuable and when it is not. A kilowatt hour on a cold, dark winter evening is different from a kilowatt hour at midday on a sunny public holiday. It follows that support must not only reward the construction of generation plants. It must reward flexibility. Storage, controllable consumers, load shifting, grid expansion and secured capacity are part of a functioning electricity system.
It is not enough to generate as much electricity as possible. The decisive question is whether the electricity is needed. That sounds banal, but it should be the real lesson from negative wholesale electricity prices. For a long time, Germany only talked about expansion targets: more photovoltaics, more wind power, more installed capacity. The market value of this electricity too often remained secondary as soon as many plants produced at the same time.
Anyone who creates supply without also considering demand and storage does not create prosperity. He creates costs.
