'Negative Electricity Prices' Emerge in Multiple Regions: If Selling Power is 'Unprofitable', Why are Power Plants Unwilling to Shut Down?

Just before the National Day-Mid-Autumn Festival holiday this year, a peculiar phenomenon occurred in the Sichuan electricity spot market during its trial settlement operation—on September 20th, the provincial spot electricity price was negative throughout the day. The maximum clearing price was -34.8787 yuan/MWh (i.e., -0.034 yuan/kWh), and the minimum clearing price was -50 yuan/MWh (i.e., -0.05 yuan/kWh), sparking widespread discussion.

Negative electricity prices had previously occurred in Shandong, Zhejiang, Inner Mongolia, and other regions. How do they arise? How do they affect power plant revenues? Knowing the price is negative, why do power generation companies choose to continue operating instead of shutting down?

Reporters from National Business Daily (hereinafter referred to as NBD reporters) interviewed several power generation companies, energy experts, and university scholars to uncover the truth behind negative electricity prices.

Electricity spot markets across China set trading price limits, with the minimum price cap in most provinces being 0 yuan/kWh. In some regions that allow negative prices, such as Shandong and Inner Mongolia, negative prices have occurred before, typically happening when power supply exceeds demand and market demand is insufficient.

NBD reporters found that in recent years, the phenomenon of negative electricity prices in the domestic power market has grown from sporadic occurrences to gradually increasing, showing a trend of "spreading from single points to multiple provinces, and from short periods to longer durations."

In 2019, the Shandong electricity spot market saw China's first negative electricity price—a clearing price of -0.04 yuan/kWh. In 2023, the Shandong spot market experienced 21 consecutive hours of negative prices. During the 2024 May Day holiday, the Shandong spot market saw 22 consecutive hours of negative prices.

Guo Hongye, Associate Professor in the Department of Electrical Engineering at Tsinghua University, revealed in a written interview with NBD that as of 2024, the time proportion of negative prices in Shandong's day-ahead market (the main trading form in the electricity spot market, organized with a one-day lead time) and real-time market was about 11% and 14%, respectively.