The price walls dividing Europe: challenges in the electricity market

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Summer periods spotlight seasonal anomalies in the electricity market, particularly the occurrence of negative daytime prices driven by oversupply. These price patterns are not merely reflections of market peculiarities; they also highlight deeper, systemic challenges that affect both the stability and flexibility of the energy system. In this context, we examined the technical, regulatory and structural issues currently facing the European electricity system.

Anomalies in the energy market

The rapid expansion of solar and wind energy is a key driver of the green transition in the electricity sector. However, the challenges intensifying in 2024 reveal that the increasing share of renewables is making the electricity supply more dependent on weather conditions. As a result, the number of temporary market anomalies has risen sharply. Oversupply is common during daytime hours, while evenings often see demand outstripping supply.

In 2024, this dynamic led to hundreds of hours with negative electricity prices across much of Europe, while the number of hours with prices exceeding 250 euros/megawatt-hour (MWh) also increased notably. One of the key barriers to price convergence is the limited availability of cross-border transmission capacity, which sometimes creates so-called “price walls” within Europe. The growing number of negative-price hours – combined with environmentally driven operational restrictions – has put increasing pressure on baseload producers like the Paks Nuclear Power Plant. Yet such plants remain crucial for ensuring the security of the energy supply.

These market distortions highlight that the current dynamics of the electricity market call for regulatory rethinking in several areas. While extreme price fluctuations may appear as isolated incidents, their impacts are clearly felt across the market. Average electricity prices have risen from the 30–50 euros/MWh range seen in recent years to between 70 and 100 euros/MWh.

Negative prices most severely affect energy suppliers (producers). In contrast, extremely high prices primarily burden consumers. Some producers – such as the Paks Nuclear Plant – are forced to curtail output due to negative prices during midday oversupply, while others (e.g., gas-turbine plants) “cash in” on the high-priced evening peaks, as they can only produce profit during this narrow time window. Moving toward a more sustainable and balanced energy system in the long run will likely require both technological and economic measures to manage these extremes, including the deployment of energy storage systems and a reconsideration of the feed-in tariff scheme.

Exceptionally low (or negative) electricity prices

Negative prices typically occur during periods when both solar and wind conditions are favourable, leading to high renewable energy generation while electricity demand remains relatively low. In such cases, renewable production can exceed real-time consumption. To maintain system stability under these conditions, excess electricity is sold at zero or even negative prices in order to incentivise demand or reduce generation. Between 2019 and 2024, the number of zero- or negative-price hours increased significantly (see Figure 1). This phenomenon is most prevalent in countries with a high penetration of solar and wind power – such as Germany and Belgium.

In southern European countries such as Spain and Portugal, negative electricity prices are less common. However, prices frequently drop to zero, especially during sunny periods (see Figure 2). In these markets, the high share of solutions that facilitate dynamic adaptation – such as hydroelectric plants with dams and reservoirs – and flexible, dispatchable generation like gas-fired power plants helps to mitigate the occurrence of negative prices. As a result, the market tends to balance itself more effectively.

This post is a reprint of an article written by our colleague, which was originally published on September 2, 2025, in the online journal CEEnergy News.