Europe’s solar glut shunts power system into tricky new transition phase

LITTLETON, Colorado, May 6 (Reuters) – Europe’s solar surge has become one of the continent’s most visible energy transition success stories. But even the staunchest clean power advocates are now sensing there can be too much of a good thing.

Solar power capacity has expanded far more quickly than any other power source in Europe so far this decade, surging by over 115% since 2020 and triggering a doubling ​in solar-powered electricity supplies flowing through regional grids.

But the blistering growth pace has come with some complicated side effects. Steadily rising solar generation is no longer just displacing fossil fuel output. It is ‌reshaping how Europe’s electricity prices behave and power markets function.

To deal with this disruptive solar flood, Europe’s power firms must now shift from focusing on adding capacity to integrating networks, building storage capacity and operating complex markets to ensure the overall system remains fit for purpose for all of Europe’s energy consumers.

Solar assets in Germany – Europe’s top economy and largest solar producer – generated a third of total utility-supplied power in April, according to LSEG, which is a record-large portion of the utility mix for that month.

As the peak solar radiation season is still ahead, solar’s ​share within Germany’s power markets will only grow from here, placing increasing strain on network managers who must adjust output levels from other power sources to balance system needs.

Power firms can accommodate some of the surges in solar ​generation by curtailing output from fossil fuel plants, thereby saving on generation costs while also reducing emissions.

However, the upswell in solar generation during the sunniest parts of the day can ⁠be so severe that no amount of throttling back of alternate sources can maintain system stability, especially in areas where baseload generation is slow to adjust.

Subsidy structures that encourage renewables to stay online regardless of price also serve to distort the ​signals being received by market participants.

The net result can trigger spells of negative power prices, which can briefly benefit some power consumers but play havoc with the balance sheets of nearly all power producers.

Indeed, the tendency for power prices to crash into the ​red during sunny periods upends the basic economics of power markets: Instead of being paid for their power, generators have to pay the market to take power off their hands.

These periods of negative pricing are not just bouts of inconvenience.

Hours-long stretches of negative or very low pricing depress earnings for all power generators, while also raising costs for those that operate dispatchable power plants powered by coal, gas or nuclear reactors.

Climate watchdogs have previously celebrated the regular shutdowns of coal-fired plants during periods of high renewable power supplies on the grounds that lower fossil ​fuel generation equals lower power sector emissions.

However, the frequent ramping of coal plants – often at short notice such as when solar output drops during cloudy spells – can result in lower efficiency and higher emissions per unit of power generated compared ​to plants kept operating at consistent levels.

What’s more, regular lurches in plant output from low to high tend to lead to more frequent and costly plant maintenance, which in turn raises the costs for the operators.

This combination of lower revenues and higher costs can in ‌turn make it ⁠harder for power firms to meet their debt service agreements or attain additional credit for expansions or grid upgrades – even for green power supplies.

The wear and tear on generation systems that comes from the sometimes frantic swings in clean and fossil fuel output also leads to more price volatility and higher overall system stress, making it vulnerable to outages and further cost increases.

Embedding the necessary flexibility and resilience into Europe’s power networks so that they can accommodate the continuing ebbs and flows of renewable power output will be costly and may take years.

Massive additions to battery capacity will be required so that the surplus waves of solar output generated during the middle of the day can be stored for later dispatch.

Europe’s utility-scale battery capacity has ​already undergone exponential growth in recent years, with an estimated ​15 gigawatt hours of capacity added in 2025 alone, ⁠according to Solar Power Europe.

But further vast extensions to battery capacities across several time scales – from those that can dispatch power within milliseconds to those that can plug supply shortfalls for days – will still be needed.

Complex upgrades to grid equipment throughout the electricity supply chain will also be essential, with tens of thousands of new inverters and other components needed to boost ​grid-forming heft and manage frequency and voltage.

Scores of transformers and thousands of miles of new transmission lines are also critical to stitch a modern grid together, and will ​need unprecedented coordination among utilities and ⁠planners to make it happen in a timely manner.

Throw in software upgrades so that power flows can be adjusted in microseconds and market incentives that drive real-time shifts to power use by key consumers and you have a recipe for one of the most challenging power system upgrades ever undertaken.

But if Europe is to successfully make the shift from an outdated system that is heavily reliant on imported fossil fuels to a cleaner and more self-sufficient power network, massive and extensive upgrades are required.

And if done successfully, these ⁠upgrades can position ​the region for a new phase of economic growth underpinned by a clean and dependable grid increasingly powered by cheap-to-produce renewables from the region’s own ​solar and wind farms.

The opinions expressed here are those of the author, a columnist for Reuters.

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