Live Power Generation and Cost in Australian National Energy Market (opens in new tab)

This isn't exactly my field of expertise, but I'd say it's almost certainly over-production. You can't "throw away" electricity you generate and you can't change production rate fast enough in many types of plants (like coal, which is most commonly in the negative on this chart). So if it's very sunny and windy for example, renewable plants will generate enough power for the current demand, meaning the coal plant should wind down. But since that would take many hours, plus many more to warm back up later, the plant would incur a significant loss in potential profit once their power is needed but they can't provide it. So it sometimes makes more sense for them to pay "the market" to take away their excess electricity, so they can keep running at a constant rate and be ready to sell power for high prices when nobody else can supply it (during overcast windless days or at night).

As for what "paying the market" means, it might be an incentive for companies to use more (by paying for and extra shift of workers to run a factory), or to cover the losses variable providers will incur when they wind down in order to prevent grid collapse. The latter is probably more of a factor than the former, but I don't have practical experience in this field to be able to say - it probably varies with time and location.

Coal getting penalized for being unresponsive to demand:

https://www.stanwell.com/our-news/energy-explainer/negative-...

> Negative prices are a signal to either increase demand or reduce supply. Intermittent and fast response energy sources (such as solar, wind, peaking generators) can stop and start in relatively short spaces of time to avoid negative price periods. Coal-fired generators however, incur significant costs stopping and starting and require many hours to restart. This means they continue generating throughout negative pricing periods as it is more cost-efficient to incur the costs of negative pricing than shutting down and then starting up again.

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> We are working to improve the flexibility of our plant so we can meet consumers’ changing demand needs. Learn more about our flexible plant trials

In California some gas plants installed batteries on site to help them avoid this kind of thing, but there's just too much coal for that to work here. You can see that the battery and pumped hydro try their best to help the coal by increasing their demand but can't quite cover it.

This is also why traditional coal or nuclear baseload is paired with gas or hydro peakers that can adjust faster.

Some power stations (coal, nuclear) take a long long time to spool up, from a cold start. As such it is cheaper for them to stay online and generating and paying users to do so that to shut them down.

It means it would be cheaper for the generator to pay you to use the power than to have to shut down or reduce output.