Europe's clean energy dilemma: record solar production drives prices into negative territory.

Europe is experiencing an abundance of inexpensive solar power during the day while still relying on costly fossil fuels at night, revealing a complex contradiction in its energy transition.

A recent report from Montel Analytics indicates a significant rise in negative electricity prices throughout Europe in the first half of 2025.

Sweden’s SE2 zone experienced 506 hours below zero, with over 400 hours recorded in Spain, Germany, and the Netherlands. The cause? An overwhelming amount of solar generation with limited capacity for distribution.

Total solar production reached 104.4TWh in Q2, inundating power grids during daylight hours. Germany, Spain, and France were the leaders, while the UK also saw a 40% increase compared to Q2 2024.

As supply exceeded demand, prices plummeted. However, as night falls, fossil fuels are still needed to meet peak evening demand, causing a second price surge within the same day.

Montel Director Jean-Paul Harreman noted that “negative power prices are expected to hit record levels in parts of Europe in Q3, driven by ongoing renewable capacity expansion without a corresponding rise in demand.”

This leads to volatility.

Prices drop at midday but evening demands remain heavily dependent on gas.

Industrial consumers are now facing significant intraday fluctuations, exposing them to both risks and opportunities. Storage and flexibility have not kept up with the changes.

Grid limitations worsen the situation. Southeastern Europe struggles to manage cheap imports due to inadequate interconnectors.

France’s nuclear outages and low hydro levels are tightening supply across the board.

While Europe’s renewable energy sector is thriving, its energy system is not adequately prepared.

Without immediate investment in flexibility, infrastructure, and storage, the pricing contradiction will only become more pronounced.