Europe’s Solar Boom Faces Challenges Amid Negative Prices and Stalled Electrification

Europe's remarkable surge in solar installations is losing momentum as plummeting profits from negative electricity prices and sluggish progress in electrification dampen investment prospects, warns SolarPower Europe, the sector's leading lobby.

Over the past three years, solar installations have grown by over 50% annually. However, this rapid expansion has contributed to increasingly frequent negative hourly prices during peak solar production, according to SolarPower Europe's CEO, Walburga Hemetsberger.

“We will continue to grow, but not at the same pace as before,” Hemetsberger noted during an event hosted by Italy’s solar association in Rome. “Negative prices are hitting record highs across Europe this year, deteriorating capture rates and making investments less attractive.”

Slower Growth Ahead

SolarPower Europe’s base-case projections indicate a more modest growth trajectory: a 9% increase in solar capacity this year, adding 62 GW, followed by expansions of 84 GW in 2026 and 93 GW in 2027.

Negative electricity prices are becoming more common in European markets, arising when strong renewable energy output from wind and solar coincides with low demand.

Stagnant Electrification

Another significant hurdle is the stalled electrification of industries and households. Electrification has stagnated at 22–23% over the past five years, far from the 35% target set for 2030.

“We need to electrify all parts of society,” Hemetsberger stressed. “Electric vehicles, heat pumps, and industrial electrification must accelerate to achieve climate goals.”

Data from the European Commission shows a 7% decline in industrial power demand in recent years, adding to the challenge.

Path Forward

The solar lobby advocates for battery storage and demand response solutions to mitigate the negative price issue. These measures, Hemetsberger said, could reduce energy system costs by €30 billion by 2030 and €160 billion by 2040.

Additionally, the group calls for:

• Expanded and modernized electricity grids.

• Streamlined permitting processes.

• Support for local solar component manufacturing to reduce reliance on imports.

Europe’s solar sector, while still a key player in the energy transition, must navigate these economic and structural challenges to sustain its growth and achieve its full potential.