Negative pricing increases electricity use but challenges grid stability

When electricity supply exceeds demand, consumers can be paid to use electricity through negative pricing. Simulations based on national surveys indicate that such pricing could double electricity loads in many US counties. However, market policies and grids must be carefully designed to avoid destabilizing the power grid with demand surges.

The problem

Electricity markets are increasingly experiencing negative prices—periods when consumers are paid to use power¹. This counter-intuitive trend stems from the rising share of intermittent renewable energy, with negative prices being used to encourage electricity consumption when supply exceeds demand^2,3. However, little is known about how factors such as price magnitude, timing, and duration of negative pricing influence the response of households. For example, it is unclear whether consumers only adjust their usage when incentives are large, or if they react strongly to even modest price changes. Additionally, if consumers respond too enthusiastically, the resulting surge in demand could strain grid infrastructure rather than stabilize it. It is therefore important to understand these behavioural dynamics to design electricity markets and policies that balance consumer participation with system reliability.

The discovery

We conducted a nationally representative survey of 1,918 US residents to examine how households respond to various negative pricing scenarios. These scenarios featured negative prices occurring at different times of day, with varying durations and price magnitudes. We then integrated the survey responses with household-level electricity data and simulated the county-level load demand change across the continental US. These simulations were used to estimate how individual willingness to participate in negative pricing events could translate into aggregate demand shifts, linking behavioural intent with system-level outcomes.

Our findings reveal broad enthusiasm for using electricity under negative prices: more than 75% of respondents indicated a willingness to increase consumption. The survey results suggested that consumers respond more strongly to rewards for increased usage than to the penalties that are traditionally used to reduce demand during peak times. Additionally, we found that people are more likely to respond on weekends and at noon, especially with longer durations and greater magnitudes, rather than on weekdays and at midnight. Interestingly, most participants were reluctant to overuse electricity for financial gain. Our simulations suggest that a two-hour negative price event at midnight on a weekend could cause demand to double in over a quarter of U.S. counties and rise tenfold in some counties (Fig. 1). Such sharp ramps in consumption could pose challenges for real-time balancing of electricity demand and generation, potentially leading to power blackouts. These findings demonstrate that negative pricing could enhance renewable integration and system flexibility. Nevertheless, careful policy and market design is needed to prevent overconsumption and ensure that demand-side flexibility supports rather than destabilizes the power grid.

Fig. 1: Impact of negative pricing on residential load demand.

Increase in county-wise electricity consumption in the continental US during a two-hour negative price event at weekend midnight simulated based on survey responses and household-level electricity demand data. © 2025, Yang, Y. et al.

The implications

Our findings show that negative electricity pricing can unlock substantial residential flexibility. However, the strong response to negative pricing raises system, equity, and policy challenges. For example, households with large flexible loads such as electric vehicles and heating, ventilation, and air conditioning devices can adapt their consumption to benefit from negative pricing more easily than households with less adaptable appliances. Moreover, negative prices are generally confined to wholesale markets, and regulations such as Texas House Bill 16 prevent their extension to households. Such policies must be revisited to balance flexibility, fairness and grid stability.

Our survey provides an empirical, behavioural perspective on how consumers respond to emerging market signals rather than how they are assumed to behave under idealized conditions. However, the self-reported willingness might not perfectly reflect real-world behavior because actual responses are constrained by convenience, appliance flexibility, and infrastructure. Our simulations also assume that negative pricing events are pre-announced and have fixed rates, but strong demand could shift prices in real time in dynamic markets. Although these factors introduce uncertainty in the magnitude of responses, they should not affect their overall direction.

The behavioral patterns identified provide valuable guidance for market design, demand modelling, and future empirical validation. Future work should use field experiments and dynamic pricing pilots to validate these behavioral responses. Additionally, efforts to incorporate real-time market feedback will improve the accuracy of predictions of the response of electricity demand to negative pricing and inform equitable, region-specific strategies for integrating negative pricing into retail markets.

Yang Yang¹ & Jimmy Chih-Hsien Peng²

¹University of Macau, Macao, China. ²National University of Singapore, Singapore, Singapore.

Expert opinion

“This study addresses an important gap in the fields of energy policy and behavioural economics by exploring how consumers respond to negative electricity prices. This is a timely topic in the context of electricity markets with high shares of renewable energy. The research combines survey data analysis and system-level simulations, offering relevant findings to inform both policy and market design.”

Matteo Barsanti, University College London, London, UK.

Behind the paper

The idea for this study emerged during the IEEE Power and Energy Society General Meeting in 2023, where discussions about recurring negative electricity price events in the UK caught our attention. As power system engineers, we were intrigued not only by the market anomaly of consumers being paid to use electricity, but also by the potential implications for grid stability. We realized that although negative pricing could encourage consumption, the potential scale of the resulting demand surges was still unknown. Therefore, we designed a nationwide survey to explore how people might respond to negative prices. We then combined the behavioural data with load demand models to quantify potential system-level impacts of negative pricing. Although we initially aimed to analyse UK data, limited access to residential load demand data led us to focus on the USA instead, where rich datasets allowed for a robust, illustrative case study. Y.Y. & J.C.-H.P.

From the editor

“This paper stood out to us because while plenty of work has focused on reducing electricity use during peak periods, comparatively little attention has been given to the question of how we may influence consumers to increase their electricity consumption during negative price events. Having this information may help in nudging consumers to contribute towards energy balancing.” Editorial Team, Nature Energy.