Europe’s solar energy season is becoming longer and more intense, posing challenges for electricity markets and grids stability due to an oversupply of cheap power.
Solar production spikes in April as longer daylight hours and sunnier conditions coincide with reduced heating demand. The surge in new solar installations is flooding the market with electricity, sometimes driving power prices below zero. This trend is cutting into renewable energy producers’ profits and deterring some investors.
Negative prices occur when electricity supply surpasses demand, but only a limited number of consumers—such as those with special electric vehicle tariffs—can benefit from free power. The surplus can be managed by increasing consumption or storing excess energy from grids. While some solar farms or grids incorporate battery storage, greater investment in flexibility is needed.
“The rise in negative prices—and price spikes at other times—signals the urgent need for investment in system flexibility,” said Chris Rosslowe, a senior energy analyst at Ember. This issue is expected to intensify as the EU plans to connect a record number of new solar installations in 2024 and 2025, according to BNEF data.
A major challenge is the mismatch between solar power generation and demand, which peaks in the early evening as solar output declines. Europe is striving to utilize abundant daytime electricity while avoiding reliance on fossil fuels at night. In March, strong sunshine pushed solar generation beyond demand, causing power prices to drop below zero. In Germany, solar energy revenues have already declined and are expected to fall further in April, according to BNEF.
The gap between payments to solar generators and baseline power prices continues to widen, potentially harming solar farm developers and operators. Additionally, low electricity prices are discouraging investment in new renewable projects, threatening Europe’s 2030 clean energy goals.
Negative pricing is occurring more frequently and has now spread to Bulgaria, Greece, and Spain, according to the European Agency for the Cooperation of Energy Regulators. Agency spokeswoman Ilaria Bellacci predicts that this trend will persist as solar generation expands. The agency also suggests restructuring subsidies that currently incentivize renewable producers to keep generating even when prices turn negative.
Rosslowe emphasized that increased investment in grid flexibility, such as expanding battery storage, would help stabilize prices. By storing surplus electricity during the day and releasing it when demand rises, storage solutions could mitigate price volatility.
Another approach is expanding Europe’s electricity grid, which is currently constrained by slow planning and transmission bottlenecks. “Negative prices indicate the need for more pathways to utilize excess solar power,” Rosslowe said. Strengthening grid connections could also reduce costs, such as payments to operators for shutting down turbines. In 2024, the UK spent over £1 billion on “congestion costs” despite record wind energy production.
Weather forecasts suggest strong solar output this spring, following record sunshine in the UK last month. However, some experts believe negative pricing may not be as severe as expected. Tim Partridge, head of energy trading at LG Energy Group Ltd., pointed out that maintenance work at Nordic nuclear plants and Norwegian gas fields could absorb some of the excess solar supply, reducing instances of negative prices.
