In a joint letter to our respective governments, 19 European solar and renewables associations* have written to their respective governments with solutions to address solar waste (curtailment) and negative pricing.
Europe is beginning to enter the era of solar abundance. Over 40 GW of solar was installed in the EU last year alone – nearly 50% more than what was installed in 2021. This is a good thing. Solar is supporting Europe’s climate and energy security goals.
However, while 2023 will likely deliver another record summer for solar generation, the European solar sector is compelled to express two key points of concern:
- Due to increased level of solar curtailment, we risk continuing to waste solar energy in these summer months.
- Unaddressed volatility of energy prices, and too frequent negative prices endanger investments in new solar PV assets.
This letter comes with a suite of solutions to ensure Europe doesn't waste a single ray of sun, and that markets send the right signals to investors.
*AT, BE, BG, CH, CZ, DK, EL, ES, EU, FR, HR, IE, IT, NO, PL, PT, RO, SK
Read our joint letter on solutions to solar waste and negative pricing
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Improve Grid Preparedness
With an accelerated development pace of renewables, planning and anticipation on grid development needs are key. Including high renewable energy scenarios is critical to stress test the grid – and already a number of TSOs have worked on 100% renewable energy grid scenarios.
Accelerate Permitting, Construction, & Digitalisation
Permitting large-scale grid infrastructure can take up to 7 years, and 10 years for cross-border projects. This can be reduced by smoothening the permitting process and prioritising strategic projects. At the same time, a strong political signal is needed to engage grid operators into their digitalisation journey – from data management to skills.
Massively promote flexible resources
While we need to ramp up battery and heat storage, we should ensure flexibility from the demand side too. We can follow the example of nuclear countries who employ flexibility from the demand side to manage inherently inflexible nuclear production - where we see Time of Use tariffs incentivising electricity consumption at night.
We can promote flexibility by:
- Mapping the flexibility needs by 2025 and develop price signal frameworks to use the flexibility potential
- Making it easier to hybridise solar (plus wind and/or storage) projects
- Make the energy system flexibility-ready by accelerating the smart building roll-out
Ensure the economic framework
As renewables are increasingly deployed on the grid, power prices become more volatile to attract flexibility – this is good. But this should not affect solar PV investments which need long-term stability and visibility.
Contracts for Difference should still provide a stable remuneration even as negative price signals increase.
It is also critical to allow merchant solar assets to capture higher market revenues to compensate for increased periods of negative prices. In that regard, the prolongation of the market revenue cap, or other capping method, risk overly skimming the extra profits of merchant solar assets that compensate for the low revenue periods.
In parallel, the cost of negative pricing should be shared by all generators, including fossil generators, that contribute to creating the constraint in order to ensure the right economic signals for generation behaviour on the grid.
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