EU must address wasted green energy and negative prices, says solar industry

Brussels: The European Union needs to address curtailment wasting solar power potential and negative prices hitting the revenues of projects, a group of solar and renewable energy associations told the European Commission.

The European Union needs to address curtailment wasting solar power potential and negative prices hitting the revenues of projects, a group of solar and renewable energy associations told the European Commission on Tuesday (1 August).

The solar industry is rapidly growing in Europe, with 40 gigawatts (GW) installed in 2022, almost 50% more than in 2021.

“While 2023 will likely deliver another record summer for solar generation,” write the associations in a letter addressed to EU Energy Commissioner Kadri Simson, they warn that issues with electricity grids, a lack of flexibility in the system and volatile prices are negatively impacting projects.

“The energy and climate crises require us to increase the deployment rates of solar to unprecedented levels. More than ever, it is necessary to take action to accelerate solar growth and mitigate energy waste,” write the 19 associations, 16 of which represent the industry in EU countries. The other signatories represent the EU as a whole, Norway and Switzerland.

A major concern for the industry is that solar power is increasingly being cut off from the grid in times of low demand, sometimes in favour of heavily-polluting coal power production.

This year, curtailments have been seen in EU countries, particularly Poland and the Czech Republic, which shut down solar power production due to unexpected lower demand while coal power plants continued producing.

“Due to the reliance on so-called ‘baseload’ and a lack of clean system flexibility, highly-emitting coal is being burned – and clean, low-cost solar energy is being wasted,” the joint letter reads.

Alongside this, the industry is warning that unaddressed volatile energy prices and “too frequent” negative prices are endangering investments in new solar assets.

“A higher volatility of prices, today exemplified through price spikes or negative prices, will be the new normal,” the associations write, arguing these mean higher uncertainty and potential revenue loss for renewables.

Many solutions to these issues were already put forward in the EU’s law to boost renewable energy production, adopted in 2018. However, this has not been properly implemented in many EU countries.

To help address the issues, the associations are calling on EU countries to improve the preparedness of grids and accelerate the permitting and construction of grid infrastructure.

With the surge of renewables expected, grids cannot wait and need to start evolving, including with anticipatory investments, they argue.

Flexibility also needs to be introduced across the electricity system, from adapting grids to making homes increasingly responsive to price signals. Alongside this, Europe needs additional storage capacity and incentives for electricity use when demand, and therefore prices, is low, such as overnight.

The associations also call for regulatory bottlenecks and double charges to be addressed when it comes to hybrid projects where solar power production is combined with storage or another generation source, like wind power.

Alongside this, investors need to get the right signal and know investments into solar are stable in the long-term, the associations argue.

This can be done with contracts for difference, which provide a guaranteed revenue for renewables and were proposed by the European Commission as a way to stabilise volatile energy prices in the electricity market reform proposed in March 2023.

European Union countries will try again this week to pass a deal on new renewable energy targets, which have been stalled by concerns from France and other states that the law sidelines nuclear energy.

However, they warn against another possible element of the reform – prolonging a controversial revenue cap for power production – saying this risks “overly skimming the extra profits of merchant solar assets that compensate for the low revenue periods”.

Solar energy is expected to continue growing in Europe this decade. The EU has set a target to hit 600 GW of production by 2030, which should help replace fossil-powered energy production as Europe looks to decarbonise and move away from its reliance on Russian energy.