This week, I was trying to get a deep understanding of the necessary conditions for the appearance of contiguous periods ("long strokes") of negative prices in electricity spot markets. Such strokes appeared for example last weekend (5 Apr 2026).
For this study, I've created a toy economic dispatch, with as few parameters as possible. Indeed the goal is certainly not to recreate a complicated twin of the real power markets but instead only summon the simplest elements which are needed to cause the phenomenon.
My core assumption, waiting to be refuted, is that negative system prices can appear even when the marginal costs of all plants in the system are positive or zero. I suppose that inflexibility (e.g. block orders) should suffice. Is this indeed the case?
As of now, with only two power plants (base: cheap but inflexible and peak: flexible but expensive), the dispatch model can reproduce isolated negative marginal price events (see video capture), which occur at the single instant(s) supporting the curtailment of the base plant due to its inflexibility. However, this model cannot reproduce a sequence of consecutive negative price instants.
Adding free solar electricity makes up for more colorful graphs and generates long strokes of zero marginal price, but not strictly negative.
So my question/challenge is: what does it take to reproduce long strokes of negative prices?
- A full-blown day-ahead power market model? Hopefully not!
- Introducing binary (ON/OFF) decisions or other non-convexities? Perhaps, is it necessary to reproduce single negative price instants?
- A larger, more diverse, fleet of power plants? Perhaps even a number as large the number of consecutive negative instants to be reproduced?
Answer not found yet...
Code available (Python notebook with CVXPY and jupyter widgets): https://github.com/pierre-haessig/electricity-dispatch-negative-price
