Tumbling solar records and evolving energy markets across Europe
The sun is shining in Europe and this week we’re taking a look into tumbling solar generation records, negative pricing and interestingly widening DA spreads across the continent. We’ll take a look at what this means for flexible generation assets including battery storage.
The past few weeks have been busy ones for our Gridcog team with industry events in London, Birmingham and this week in Sydney, in our Industry Insights section we’ll briefly recap some of the key themes we’ve heard about on the road.
Unsurprisingly one of those key themes has been the rapidly emerging opportunity for BtM assets to participate in wholesale energy markets in GB thanks to code modifications including P415. An important element to remember when modelling energy markets is that Traders (or Optimisers) don’t have perfect foresight of market prices. In this week’s Thinking Energy video Ashok Willis takes us through how you can reflect this price forecast uncertainty in Gridcog, such that your modelling more closely reflects reality:
Deep Dive: Duck curve and price spreads in Europe
In the last week we’ve seen the solar generation record be broken twice in the GB market, with the most recent record being set on Monday 6 April at 12.68GW. Given the pace of the energy transition and solar deployment it’s largely unsurprising that these records tumble every Spring. However, what is interesting is the impact that the evolving duck curve is having on power prices and power price spreads across Europe.
Negative prices and why they occur
Simply speaking wholesale energy prices are a result of supply and demand. Higher demand results in more expensive generators needing to be dispatched, which in some markets still includes coal and diesel fired back up generators. The opposite happens when generation is over-supplied and exceeds demand, in these cases most renewable generators will not immediately curtail their output as prices fall below zero, this is primarily for economic reasons. Many renewable generators earn lucrative subsidy or green certificate payments, which still means they’re in the money if prices are below zero and some will be on feed in tariffs or PPAs that provide little to no incentive to curtail output. We saw this in action across Europe last weekend with prices trading below -€100/MWh.
The duck curve
A well known phenomena in energy markets with a high solar penetration is the ‘duck curve’ this is where demand is lower in the middle of the day as it is off-set by solar generation. With higher PV deployment we’re seeing this duck curve widen and apply to shoulder months as well. This graphic from Killian Daly gives a good depiction of how this has changed in Germany over the last 3 years, given Germany hopes to double installed PV by 2030, we only expect this to grow.
Price spreads in Europe
Changing supply and demand conditions are changing the fundamentals over power markets globally. This is playing out via the increase in negative pricing but also changing price spreads. Interestingly across many European markets Day Ahead Hourly price spreads have increased substantially between Q1 2024 and Q1 2025, with spreads in Poland up 130% with Germany close behind at 89%. Importantly, increased solar generation is not the only part of this story but it does play a role.
What does this mean for flexible generation assets?
Flat prices provide no incentive for flexible generation assets to do anything, whereas deeply negative or wide spreads provide an increasingly strong signal for flexible assets such as battery storage, EV fleets or flexible loads to respond. In cases where prices are negative these assets are effectively able to charge for free (or get paid to charge), this may be via a standalone optimisation strategy or via charging off excess onsite generation. Typically the strongest price signals come via wholesale energy markets as supplier tariffs tend to dampen them. This is where we think opportunities to optimise flexible generation assets using market mechanisms such as P415, P375, On Market Child Meters and NEBEF are exciting developments.
Product Corner: Using a submeter
Many energy projects have different stakeholders and sometimes different price signals for different asset classes. This could be a BtM BESS that has hired an aggregator who can optimise the battery in wholesale energy markets or could be a microgrid with different supply arrangements between tenants and landlords. In Gridcog we have a submeter asset that allows our clients to reflect different commercial arrangements on an asset level in their project. Do reach out if this is of interest for your energy projects.
Industry Insights: UK Events Roundup
Our London team has just wrapped up three busy weeks of energy industry events with our team attending and presenting at Energy Technology Live, Inspiratia’s Energy Storage Summit and Solar and Storage Live in London. It’s been great to have the Gridcog team (and our pink t-shirts) out in force and lovely to catch up with so many clients and industry friends.
Although the focus of all three events was slightly varied there was strong consistency in key themes from the events, we’ve briefly summarised some of them below.
REMA - the jury is out
REMA is the GB Market’s Review of Electricity Market Arrangements with announcements on some big potential changes following consultation processes due this summer. The biggest is whether the GB market will shift from a single power price to a zonal market, with the number of pricing zones still TBD. REMA also includes a number of other potential changes including potential changes to the GB Capacity Market via splitting it from carbon to low carbon generation sources. Views on the ‘right way forward’ in particular on zonal seem quite split amongst industry.
P415 - is live and behind the meter assets are back
P415 is a code modification that went live in the GB market in November 2024, this enables behind-the-meter assets to appoint an optimiser/aggregator who is independent from their supplier, thereby enabling them to participate in energy markets. This is something that we’re particularly excited about at Gridcog and we’ve seen a huge number of our clients looking to model. It’s been great to see so many people across the industry not only talking about P415 as a concept but also mentioning how they’re optimising these assets in practice!
Grid connections reform - key focus for developers
NESO’s grid connections reforms are top of mind for many developers who are awaiting confirmation of the reform and whether their projects receive a Gate 1 or Gate 2 offer; this is largely dependent on whether the project aligns with the CP30 plans. A few developers also bought up the proposed amendment to Transmission Impact Assessments, and this potentially lifting from a 1MW to a 5MW threshold - this could prove to be a further accelerant for behind-the-meter and distribution connected assets.
What is clear is that the energy space is ever-changing and understanding how different market or regulatory changes may affect project outcomes is vital.
The next events that you can catch the Gridcog team at are the Smart Energy Expo in Sydney this week and Intersolar in Munich in May! Do reach out to the UK/EU team or Aus team if you're planning to be at either.
That’s all for this week. If you’d like to see how Gridcog can model your energy projects, click here to book a call with our team.
Or, if you have any interesting project use-cases you’d like to see modelled in Gridcog, email our marketing magician dan.pearson@gridcog.com and we’ll spin it up!