However, the rapid growth in solar supply capacity throughout Europe's electricity grids is already starting to erode producer profitability, as surplus power from solar sites depresses wholesale electricity prices and results in utilities earning shrinking revenues from renewables.
However, since Russia's invasion of Ukraine snarled Europe's gas markets in 2022, Europe's power generators have accelerated the build-out of renewable energy capacity while cutting back on electricity generation from fossil fuels.
However, those strong earnings may start to become harder to generate as additional volumes of solar capacity are brought online and compete with all other forms of generation to set wholesale electricity prices.
California’s ‘Duck Curve’ electricity marketsEuropean solar power producers are not yet faced with anything like the problems seen in California, where solar can account for 40% of total electricity generation.
But as more solar supply capacity gets added to Europe's generation system, solar producers must expect the extra competition from other solar sources to drive electricity prices lower for all electricity generators.
Persons:
Gavin Maguire, Lisa Shumaker
Organizations:
Reuters, Thomson
Locations:
Europe, Ukraine, California, Germany