Surging Solar Output Drives Significant Electricity Price Declines Across Key European Markets
Key Insights
European electricity prices significantly decreased across major markets during the week of July 28, primarily due to increased solar energy generation.
AleaSoft Energy Forecasting reported weekly average prices below €80/MWh in most markets, with the Nordic market reaching a low of €29.95/MWh.
Record daily solar production levels were achieved in Italy, Portugal, Spain, and France in early August, further contributing to grid stability and lower costs.
While some markets anticipate price increases due to reduced wind, continued solar growth is expected to sustain downward pressure on prices in others.
Wholesale electricity prices across major European markets experienced a notable decline during the week commencing July 28, primarily driven by robust solar energy production, according to an analysis by AleaSoft Energy Forecasting. The Spanish consultancy reported a significant week-on-week drop in average electricity prices across the Belgian, British, Dutch, French, German, Italian, Nordic, Portuguese, and Spanish markets, signaling a growing influence of renewable generation on market dynamics.
During the specified week, weekly average prices remained below €80/MWh ($93.21/MWh) in most markets, with the British and Italian markets being exceptions at €88.77/MWh and €104.28/MWh, respectively. The Nordic market recorded the lowest average at €29.95/MWh, reflecting its high penetration of hydropower and wind. The substantial increase in solar energy output in key markets, including France, Germany, Italy, and Spain, was a primary driver for these price reductions. This was complemented by a general decrease in electricity demand across most analyzed markets and, in select regions, an uptick in wind energy production.
Further demonstrating solar's escalating impact, several markets set new daily solar production records for August. On August 1, the Italian, Portuguese, and Spanish markets achieved unprecedented daily solar generation figures of 143 GWh, 27 GWh, and 196 GWh, respectively. France followed suit on August 2, registering a new daily record of 133 GWh. These record-breaking outputs underscore the rapid expansion and increasing reliability of solar photovoltaic installations across the continent.
AleaSoft forecasts that the week commencing August 4 will see a varied price outlook. While prices are anticipated to increase in France, Italy, Spain, and Portugal, largely influenced by a projected drop in wind energy production, other analyzed markets are expected to experience further price declines. This continued downward pressure on prices in some regions is attributed to an anticipated increase in solar energy production, particularly in Germany, Italy, and Spain, reinforcing solar's role as a key price-setter in the European energy mix.