Electricity Pricing
Germany now has 575 hours of negative electricity prices per year. Midday solar crashes prices to below zero while evening peaks hit EUR 120+/MWh. This spread is the business case for VPPs.
The Rise of Negative Prices
Negative electricity prices mean the grid is literally paying generators to stop producing. They signal a system that cannot absorb its own clean energy — a problem closely tied to grid curtailment. In Germany, negative price hours have grown from 15 in 2008 to 575 in 2025 (source: SMARD).
| Year | Negative Hours | Solar Capacity |
|---|---|---|
| 2008 | 15 | ~5 GW |
| 2015 | 126 | 39 GW |
| 2020 | 298 | 54 GW |
| 2022 | 69 | 66 GW (energy crisis) |
| 2023 | 301 | 82 GW |
| 2024 | 457 | 100 GW |
| 2025 | 575 | 106 GW |
The deepest negative price recorded was -250.32 EUR/MWh on May 11, 2025. The exchange floor of -500 EUR/MWh has never been reached. Negative prices are not limited to Germany — Spain hit 769 negative hours in 2024, Finland reached approximately 700 hours.
The Duck Curve
The "duck curve" describes the shape of net demand throughout a sunny day. Solar floods the grid at midday, crashing prices. As the sun sets, demand ramps steeply and prices spike. The spread between midday and evening is the economic opportunity for storage.
| Year | Midday Avg (12-14h) | Evening Avg (19h) | Spread |
|---|---|---|---|
| 2015 | EUR 30.2 | EUR 41.1 | EUR 10.9 |
| 2019 | EUR 30.2 | EUR 49.9 | EUR 19.7 |
| 2023 | EUR 49.3 | EUR 128.3 | EUR 79.0 |
| 2024 | EUR 20.6 | EUR 123.8 | EUR 103.3 |
| 2025 | EUR 16.1 | EUR 119.6 | EUR 103.5 |
The spread is the real story: EUR 10.9 in 2015 to EUR 103.5 in 2025 — a 10x increase in 10 years. Midday prices collapsed from EUR 30 to EUR 16 as solar capacity nearly tripled. Evening prices plateaued at EUR 120+, driven by gas and CO2 cost floors.
The Merit Order Effect
In wholesale markets, generators bid in order of marginal cost. Renewables have near-zero marginal cost and always dispatch first, pushing expensive gas and coal off the stack. Each additional GW of renewable capacity reduces wholesale prices by 0.5-1.0 EUR/MWh on average.
Batteries amplify this effect. They absorb cheap midday solar (preventing negative pricing) and discharge during expensive peaks, spreading the price-reduction effect across more hours. This is the core demand response mechanism. Modeled estimates suggest batteries can extend the merit order price reduction by an additional 20-40% across evening hours.
Price Extremes
Dec 12, 2024: EUR 936.28/MWh during the Dunkelflaute — the dreaded dark doldrums when both wind and solar collapse simultaneously under high-pressure winter weather.
Jan 7, 2025: Continuous intraday price reached EUR 1,056/MWh.
May 11, 2025: -250.32 EUR/MWh at midday. The grid was paying generators EUR 250 per MWh to stop producing electricity. A battery charging at that moment was being paid to store energy.
Total swing from negative to positive extreme: over EUR 1,300/MWh.
The Arbitrage Opportunity
A battery that charges at midday (when prices are negative or near-zero) and discharges in the evening (when prices exceed EUR 100/MWh) captures the entire spread. With 2025 summer spreads averaging EUR 103.5, a single daily cycle generates significant revenue.
This is precisely what VPPs like Flexa do — coordinating thousands of home batteries to trade on the five-minute continuous intraday market, capturing very short-term arbitrage while simultaneously stabilizing the grid.