In some electricity markets, the price of electricity can fall below zero. A generator can effectively pay someone to take its power. Why would anyone do that? Because shutting down can sometimes be more expensive than accepting a negative price. Some generators are difficult or costly to ramp down quickly. Others may have incentives tied to continuing production. When supply overwhelms demand and transmission cannot move the excess elsewhere, prices can cross below zero. ERCOT recorded periods in 2024 when more than 40% of five minute intervals had system prices below $0/MWh. The interesting part isn’t electricity. It’s the mechanism. A price can become negative when the cost of changing your position is greater than the cost of accepting a bad price. Markets are full of situations like this. The visible price tells you what happened. The incentives explain why someone was willing to accept it. #MarketStructure# #Trading# #Economics# #EnergyMarkets#