Yes this happens.

Yea shutting off anything that is producing free electricity to keep a market price stable is moronic....

It's not to protect market price, it's to protect the grid. You basically need to use as much power as you produce, if this becomes imbalanced, you damage the grid.

In this case, demand is lower than supply, so either you decrease the supply (shutting down the solar farm here), or increase the demand (lower the price). Because this is transient, and some powerplants (e.g. nuclear) take time and effort to shut down, for those operators it is cheaper to pay you to use their energy during those times (negative prices), than to shutdown/restart when needed.