Large field experiments in Great Britain and Spain suggest that free electricity can shift demand into periods of abundant renewable supply, while paying consumers beyond zero added little response.
Research question
Can consumer demand response provide a practical alternative to curtailing renewable generation during periods of negative wholesale prices?
Method & data
Nationwide natural field experiments in Great Britain and Spain randomized residential customers to incentives for increasing electricity use during periods of abundant supply.
Main finding
Demand rose when prices fell to zero, but additional payments beyond zero produced little extra response. The abstract reports larger responses among homes with electric vehicles or rooftop solar.
Why it matters
Demand-side flexibility could capture value from electricity that would otherwise be curtailed, especially as households adopt electrified technologies.
What to verify
The public abstract reports different patterns of load shifting across the two countries and does not establish that every grid or tariff design would produce the same welfare result.
Show public abstract used for this summary
As renewable generation plays a growing role in the energy system, periods of negative wholesale electricity prices are becoming increasingly common and are expected to grow dramatically over the next ten years. Traditionally, system operators respond by paying generators, especially renewables, to curtail production, or mandating that they do so without compensation. In this study, we propose and test a novel alternative: exposing consumers to free and negative prices to stimulate demand when supply is abundant. We implemented large-scale nationwide natural field experiments simultaneously in Great Britain and Spain, with roughly 60,000 residential customers in each country randomized to receive varying financial incentives to “turn up” their electricity. We found that demand increased substantially as prices fell to zero, but paying customers to consume beyond zero price yielded little additional response. Households with electric vehicles and rooftop solar had a larger elasticity than households without such technologies, suggesting demand turn-up becomes more effective as households adopt low-carbon technologies. In Great Britain, consumption was largely shifted from adjacent hours, while in Spain the increase appeared to represent net new demand. We develop a welfare framework showing conditions under which demand turn-up improves on curtailment; we find that by inducing additional consumption in periods and locations where the marginal cost of supply is low, demand turn-up generates welfare gains that curtailment leaves uncaptured.