Increasing variable renewable generation is leading to periods in which electricity supply exceeds demand – driving down wholesale prices, sometimes to zero or below. At such times, generators are willing to pay to supply, rather than be paid, largely due to dispatch-based subsidy schemes. However, these low or negative prices rarely feed through to consumers.

Centre for Net Zero partnered with Octopus Energy in Great Britain and Spain to test whether households would turn up electricity use during periods of surplus generation – typically very windy periods in Britain or sunny periods in Spain.

The trial was the first large-scale, demand-side negative-pricing experiment, involving 120,000 consumers. It provides some of the first causal evidence on how households respond to short-notice price signals during periods of renewable oversupply. Across events aligned with high renewable output and low wholesale prices, households were randomly offered incentives to increase consumption within defined windows: discounts, free electricity, or direct payments.

Our findings show that simplified financial incentives can elicit domestic demand turn-up, with potential to support future system balancing needs, and that this has positive welfare benefits by putting otherwise curtailed, cheap electricity to productive use.

① When incentivised, households increased demand during periods of high renewable supply. In Spain, a 50% discount increased demand by 6%, and free electricity increased demand by 12%. In Britain, a 50% discount increased demand by 15%, and free electricity by more than 30%. A separate local trial in Britain, whereby households actively opted into events, saw a 105% increase from participants in response to free electricity. These differences are explained by variation in programme design, trial set-up and household characteristics.

② Free electricity appeared to offer the most compelling balance between volume and cost-effectiveness. In both Great Britain and Spain, doubling the discount from 50% to 100% resulted in roughly double the demand turn-up. Paying customers to turn up demand use electricity delivered minimal additional volume at higher cost, although may be justified if volume is a priority.

③ Demand response was largest from households with low carbon technologies. Customers with electric vehicles (EVs), heat pumps, or on time-of-use tariffs exhibited larger responses, reflecting both greater capacity to increase consumption and perhaps greater familiarity with responding to price signals.

④ Turn-up includes some load-shifting as well as creating new demand. In Great Britain, but not Spain, there was some evidence of load shifting, with consumption displaced from periods before and after the event window.

⑤ Demand turn-up improves economic welfare by putting otherwise curtailed renewable electricity to productive use. Welfare gains arise from increasing consumer surplus when electricity is abundant, while the distribution of those benefits between consumers, generators and government depends on market design.