Negative energy prices charge up battery growth

MasTec

21/10/2026 15:59

The author is a Reuters Breakingviews columnist.  The opinions expressed are his own.
By Robert Cyran
NEW YORK, Oct 27 (Reuters Breakingviews) - Solar has become the cheapest way to produce electricity, and the price keeps falling. While the world is building as fast as it can, this has also made the price of power more volatile, and in many markets there’s so much produced that prices increasingly go negative. The phenomenon is a catalyst for its own solution: supercharged battery deployment.
In the US, utilities will install about 43 gigawatts of new solar this year, according to the US Energy Information Administration. That’s about 3.5 times as much as new wind generating capacity in 2026, and almost seven times as much natural gas. Advantages also keep compounding. The price of building a new gas plant has roughly tripled since 2022 and the wait for a new turbine runs five years or longer. Solar’s price keeps falling, and projects can be started immediately. This logic is playing out worldwide.
Solar power production follows the sun’s arc. Install lots of panels, and that means plentiful daytime power. Install more, and there may be too much. It's a problem because electrical grids must always balance supply and demand. Things become wacky, however, when price is used as a cudgel to reduce supply.
Solar and wind power cost almost nothing to run. Incentives and tax credits mean producers may make money even if the price is zero. Nuclear and coal plants, by contrast, are difficult and costly to stop and start, so it’s often cheaper to absorb temporary losses and keep running. The result is that if there’s lots of sun or wind, demand is low, and transmission lines out of the area are clogged, the price must go negative to knock out supply and clear the market.
This is becoming common, especially in sunny markets. Both California and South Australia had negative wholesale prices 20% of the time in the first half of the year, according to the International Energy Agency, with Spain only slightly less. Even cloudy places like New England see negative prices more often.
This can cause problems. Returns on cheap, clean energy projects fall, slowing their deployment. Nuclear and coal plants provide steady power regardless of weather, but since they can’t shut off easily they absorb losses when prices are negative. And volatility in electricity supply can make the grid harder to manage. In France, the grid can now require EDF to run nuclear reactors at a loss, for which the company is reimbursed, to keep it stable.
There are several fixes. Green power incentive programs can be more carefully crafted. New solar projects in Germany, for example, no longer receive subsidies when prices are negative for more than 15 minutes. Demand can be nudged around, by encouraging consumers to charge EVs and use appliances when power is plentiful. Parts of sunny Australia now offer consumers free electricity for three hours a day.
Building more transmission is often better. Connect two areas and you can help both, as weather and timing of production differ. Denmark, for example, produces 60% of its power with wind, which it exports to Germany, Sweden, and the United Kingdom when it has too much. A construction campaign in the US would be a boon to companies like MasTec MTZ.N and Quanta Services PWR.N.
This takes years, however. In the United States, the number of jurisdictions to be crossed and approvals obtained means far too little is being built. In 2025, just over 400 miles were completed. The Department of Energy estimates 5,000 miles of new high-voltage lines are needed annually.
Electricity storage changes the equation. Batteries have been on the grid for years, mostly to prevent small and damaging power supply fluctuations. Cratering prices, however, have expanded their appeal. Battery costs have fallen by more than 90% in three decades, and the price per kilowatt hour tumbled another 8% last year according to BloombergNEF. Excess power can now be shifted in time to when there’s a deficit. The idea is simple: fill up batteries when prices are, say, $30 a megawatt hour, and then empty at $100. The owner pockets the difference, minus the energy lost in charging the battery, depreciation and other costs. The lower the cost of power, the more attractive the arbitrage becomes. Being paid to take electricity is obviously the best.
The result is a massive wave of battery deployment, as US storage grew some 70% on average over the last three years. Just look at Texas, which installed the most photovoltaics and batteries last year. Storing cheap solar power and discharging it when prices are higher has reduced electricity prices. This summer saw record demand during an eight-day heatwave. Yet the average price was less than $35 per megawatt hour, compared to nearly $200 during a similarly long period in 2023, according to researcher Corey Balgeman at Grid Flexibility. And batteries save substantial money by reducing peak winter prices.
Storage also makes the state grid, which has a history of spectacular failures, more reliable. There were 13 declared emergencies for uncomfortably low available power in 2023, but zero in 2025 and 2026.
Batteries are also versatile. They can allow existing infrastructure to run more intensively. Since electric supply must always meet demand, costly plants are sitting around and rarely used. In 2021, so-called peaker plants accounted for 3% of annual net electricity generation, but represented 19% of generating capacity according to the US General Accounting Office. Batteries are increasingly replacing these plants.
Likewise, transmission lines are built for peak demand and can sit idle at other times. Batteries can charge from underused lines, and discharge at a higher price locally when the line is at capacity.
Other uses will likely be discovered as solar and battery prices keep falling, thanks to increased economies of scale at producers and researchers churning out technological improvements. Such developments makes them attractive for new markets, and in uses that aren’t obvious today. Utilities such as Vistra VST.N, Engie ENGIE.PA or NextEra Energy NEE.N, which itself plans to deploy as much as 43 GW of new battery storage through 2032 to boost top line growth, could end up installing even more.
Indeed, negative prices can introduce mind-bending opportunities and dilemmas. Occasionally, owners are now paying to discharge, and then recharge when prices are even more negative. The snag is that the battery owner may lose money with a wrong forecast. This can also trigger regulatory trouble: selling power when it’s cheap, but purposefully withholding electricity at higher prices, is often illegal.
As for who benefits, it’s hard for producers to make a buck due to over-investment and cutthroat pricing. Chinese companies including Sungrow, CATL 300750.SZ and BYD dominate production of battery energy storage systems, but their stock prices have gone nowhere for five years. Tesla TSLA.O has done better, but the company's operating profit has dropped three years straight. Instead, the winners could be consumers and businesses that use electricity, via restrained prices and sturdier grids.
Follow Robert Cyran on Bluesky.

(Editing by George Hay; Production by Pranav Kiran)
((For previous columns by the author, Reuters customers can click on CYRAN/robert.cyran@thomsonreuters.com; Reuters Messaging: robert.cyran.thomsonreuters.com@reuters.net))