Sweden leads Europe for negative price hours

Midsummer in Sweden is a time of dancing around maypoles to the små grodorna (frog song), flower wreaths and the all-important jordgubbstårta (strawberry cake). But this year, the celebrations come with a twist: if you baked that cake when the power price was negative, you may have pocketed money just for turning on the oven.

Midsummer brings the longest day of the year, but also marks the moment when solar hours, and generation, start to fall. Sweden leads Europe for negative price hours. This title was held by Finland for both 2023 and 2024. But it was outpaced by its neighbour this summer.

Fig.1 - Negative prices across Europe. Image: Montel Analytics.

A summer of negative power prices

How did we get here? Negative prices in the Nordics first showed up in 2020 during the Covid-driven demand collapse. But things changed when Finland’s Olkiluoto 3 nuclear plant came online in 2023. It brought 1.6 GW of must-run capacity to an already strong wind buildout, which saw negative hourly prices hit record levels, spilling volatility across the region.

Then from 2023, negative prices started hitting weekdays, not just weekends. In the Nordics, the low value of guarantees of origin (GOs) compared to subsidies in central Europe means negative prices aren’t always as extreme – but they are persistent.

Central Europe’s solar boom has also had an impact. By mid-2024, more than 30 GW of new solar had launched in Germany and neighbouring countries. Now, during sunny hours, the Nordic region sometimes imports negative prices thanks to stronger price coupling and interconnectors with its neighbours on the continent. The effect ripples across the day even though hydropower can store up during solar peaks and discharge at other times.

Fig.2 - Cumulative negative price hours in Swedish price zone SE2. Image: Montel Analytics.

Why are Swedish energy prices negative?

This year, several factors have driven Sweden’s negative prices.

Excess supply in the north: unusually strong hydro inflows during the spring floods mean hydro plants must generate, even at a loss, to avoid overfilling reservoirs. This happens when demand in the region is weak.

Limited transmission: bottlenecks, especially at the SE2-SE3 boundary, keep cheap northern supply from reaching the south, where most people live.

Renewables buildout: Sweden has added 1 GW each of solar and wind in 2024, bringing the respective totals to 5 GW and 17 GW, mainly in the north. Not all producers can or do respond to negative prices.

Flow-based market coupling: this is the first summer under new rules which changed the direction and timing of cross-border flows. In some hours, more power moves to expensive southern regions, in others, cheap imports flow north.

Volatile balancing markets: since March, balancing and imbalance prices have become more volatile, partly due to the launch of the Nordic mFRR Energy Activation Market (EAM). Some wind producers can even make money by selling at high day-ahead prices and buying back at low balancing prices – an incentive to switch off in a “downregulation” trend.

Frequent down regulations: some zones regularly downregulate. Producers with flexibility can benefit from selling in the day-ahead market and buying in the balancing market.

Strawberry cakes, shifting strategies

Negative prices aren’t all bad – but they do shake up the market.

Negative hours look like a chance to “get paid to consume”, though the boost to new demand has been slow so far. On the supply side, producers see lower capture prices and more risk but can adapt by hedging, actively trading or diversifying their portfolios.

It’s an opportunity for flexibility providers. Anyone who can respond quickly – by changing load or output – can profit, particularly as volatility increases. Developers need new strategies. A diverse approach combining long-term contracts, storage and short-term trading will be key.

Bakers were happier this summer with a little cash for each strawberry cake they made. But as Sweden (and the rest of Europe) embrace renewables, the real challenge will be how to adapt market rules, build flexibility and keep investments on track.

In the end, how Swedes respond – by using power smartly, investing in flexibility or enjoying one more piece of cake – will determine whether negative prices become an occasional treat or a persistent headache for years to come.