What are negative prices?
In the National Electricity Market (NEM), wholesale spot prices are set every five minutes through AEMO's dispatch engine. While prices can reach as high as $17,500/MWh during scarcity, they can also fall below zero — all the way down to the market floor of −$1,000/MWh. When the spot price is negative, generators are effectively paying to keep their electricity on the grid.
This is not an error or a market malfunction. Negative prices are a rational economic signal indicating that supply exceeds demand and some generators find it cheaper to keep running at a loss than to shut down and restart.
Why negative prices happen
Several factors combine to produce negative price intervals in the NEM:
- Renewable oversupply: When wind and solar generation exceeds demand, surplus electricity floods the market. Renewable generators with zero marginal cost and contractual obligations (such as PPAs) continue generating even at negative prices because their revenue comes from other sources like LGCs and contracted offtake.
- Inflexible baseload: Coal-fired power stations are technically difficult and expensive to cycle. Shutting down a coal unit can take hours and cost hundreds of thousands of dollars in restart fuel and wear on equipment. Operators often prefer to run at a loss during short negative-price periods rather than incur shutdown and restart costs.
- Minimum generation constraints: Some generators have contractual or technical minimum output levels. Gas turbines providing system strength services or running under must-run contracts may be constrained on even when their output is not economic.
- Interconnector limits: When transmission constraints prevent surplus generation from flowing to neighbouring regions, the oversupply is trapped locally, deepening negative prices. This is particularly common in SA when Heywood interconnector exports to VIC are constrained.
Which regions see them most
Negative prices are not distributed evenly across the NEM. The regions with the highest renewable penetration and most constrained interconnections experience them most frequently:
South Australia (SA1)
The most frequent negative prices in the NEM. SA's combination of high wind capacity, rapidly growing rooftop solar, and limited interconnector capacity to VIC creates regular oversupply during sunny, windy conditions. Negative prices are common between 10am and 3pm.
Victoria (VIC1)
Increasingly frequent negative prices as wind capacity grows. Midday solar combined with western Victorian wind farms can push prices negative, particularly when brown coal units maintain minimum generation levels.
Queensland (QLD1)
Growing negative price frequency as large-scale solar ramps up. Midday oversupply is becoming a regular feature, though QLD's larger demand base absorbs more generation than SA.
NSW (NSW1)
Less frequent than SA or VIC but increasing. Strong midday solar output during low-demand periods like spring weekends can produce brief negative intervals.
Tasmania (TAS1)
Occasional negative prices when hydro generation is high and Basslink interconnector exports are limited. Less common than mainland regions.
How often do negative prices occur?
The frequency of negative pricing has increased significantly as renewable capacity has grown. In South Australia, negative price intervals can account for 10–15% of all dispatch intervals during spring and early summer months. Across the NEM as a whole, the proportion of negative-price intervals has roughly doubled over the past three years.
Negative prices are most common during midday (10am–3pm AEST) when solar output peaks, on weekends and public holidays when commercial and industrial demand is low, and during spring and autumn when mild temperatures reduce heating and cooling loads.
What they mean for commercial buyers
For commercial energy consumers on spot-exposed contracts, negative prices represent a direct opportunity to reduce costs or even earn revenue by consuming more during these periods:
- Load shifting:Schedule energy-intensive processes — manufacturing, pumping, refrigeration, data centre workloads — to coincide with negative or near-zero price windows. gridIQ's pre-dispatch forecasts can identify these windows up to 40 hours ahead.
- Battery charging: Charge on-site or grid-scale batteries during negative prices and discharge during evening peaks. The arbitrage value of this cycle is directly increased by negative pricing events.
- PPA structuring:Renewable PPAs can include negative price clauses that limit generator payments during negative intervals. Understanding the frequency and duration of negative events in your PPA counterparty's region is essential for contract negotiation.
- Alert automation: Set gridIQ price alerts to trigger at $0/MWh or below. Webhook integrations can automate load responses — increasing consumption when prices go negative and curtailing non-essential loads when they spike.
How gridIQ detects negative price events
gridIQ's NEM event detection system automatically identifies negative price events as they occur. Each event is classified by severity, duration, and region, and enriched with AI-generated context explaining the likely causes — generation mix, constraint status, and weather conditions.
View live and historical NEM events on the events page, set up alerts for negative prices in specific regions, or ask Watt AI to analyse negative price patterns and their correlation with renewable output across any region. View current prices on our live electricity prices page.