The EU needs to tackle squandered renewable power and negative price phenomena, according to the solar sector

Solar power in Europe is expanding swiftly, with an installation of 40 gigawatts (GW) in 2022, nearly a 50% increase from the previous year. “The upcoming summer in 2023 is anticipated to set new highs in solar energy output,” state the associations in a correspondence sent to EU Energy Commissioner Kadri Simson, but they caution that complications with electric grids, inflexibility in the system, and fluctuating prices are adversely affecting initiatives. “The present challenges in energy and climate make it imperative for us to elevate the incorporation of solar energy to never-before-seen heights. Now, more than ever, there’s a need to expedite the expansion of solar and minimize energy squandering,” the letter from the 19 associations declares, with 16 representing the industry in EU nations, and the remaining signatories speaking for the EU, Norway, and Switzerland as a collective.

The sector is increasingly alarmed that solar electricity is frequently disconnected from the grid during periods of reduced demand, sometimes in preference to more polluting coal energy production. Curtailments were observed this year in EU nations, notably in Poland and the Czech Republic, which halted solar energy production due to unpredicted declines in demand while coal-fired plants persisted in operation. “The dependence on so-called ‘baseload’ and a scarcity of clean flexibility in the system means that polluting coal is consumed, and pure, economical solar energy is squandered,” the collaborative letter conveys. Along with this, there are warnings from the industry that unchecked fluctuations in energy prices and “excessively recurrent” negative prices are putting new solar investments at risk.

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“A greater inconsistency in prices, now illustrated by spikes or negative values, will become a standard occurrence,” the associations articulate, claiming this leads to augmented unpredictability and potential loss of income for renewable sources. Several resolutions to these problems were previously introduced in the EU’s legislation to enhance renewable energy generation, enacted in 2018. Nonetheless, many EU nations have not adequately put this into practice. To mitigate these concerns, the associations urge EU nations to enhance the readiness of grids and hasten the approval and construction of grid facilities. They contend that with the expected influx of renewable energy, grid development must commence immediately, including forward-looking investments.

There is also a need to embed flexibility throughout the electrical system, from modifying grids to increasing residential responsiveness to price fluctuations. In conjunction, Europe requires more storage capability and stimuli for power consumption when the demand, and consequently prices, are low, like overnight hours. The associations further urge that legal obstacles and dual fees be tackled in hybrid projects that combine solar energy production with storage or another energy source, such as wind. Additionally, they stress that investors must receive the proper indication that investments in solar energy will be stable in the long run.

This could be achieved through contracts for difference, which ensure consistent revenue for renewable energies and were suggested by the European Commission as a means to temper unstable energy costs in the electric market overhaul put forth in March 2023. Nevertheless, they advise against extending a debated cap on income from power generation – expressing that it could risk “excessively reducing the additional profits from commercial solar assets that balance out the periods of low revenue.” Solar power is projected to persist in its growth in Europe throughout this decade. The EU has stipulated a goal of reaching 600 GW of production by 2030, an ambition that should aid in phasing out fossil-fueled energy as Europe aims to decrease carbon emissions and reduce its dependence on Russian energy.

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