Solar power without returns – Why storage is crucial now

KK: With pleasure! The term describes the phenomenon of the solar industry “cannibalizing” market prices through the massive expansion of its own capacities. If a lot of solar power is fed into the grid but demand is low at the same time – at weekends or on public holidays, for example – revenues on the electricity exchange fall. In combination with high wind volumes, this can even lead to negative electricity prices.

The problem is exacerbated by two developments: on the one hand, large ground-mounted systems feed a lot of electricity into the grid, thereby increasing supply. On the other hand, smaller rooftop systems, which are often designed for self-consumption, reduce demand on the grid.

Installations that are no longer protected by the EEG support mechanism and sell most of their electricity on the spot market – i.e. mostly large ground-mounted installations – have been hit particularly hard.

So the changes to the funding mechanism are making the situation even worse?

KK: The mechanism guaranteed operators fixed revenues for 20 years: the transmission system operator compensates the difference between the market price and the subsidy amount. However, this protection has been gradually restricted since 2016. Initially only for six consecutive hours with negative prices – new plants now lose their entitlement to subsidies from the very first hour with a negative market price.

Is the expansion of solar really already having such a strong impact on negative prices?

KK: Yes, definitely. 2024 was a record year for the expansion of solar installations – and at the same time there was also a massive increase in hours with negative electricity prices. A total of 459 such hours were counted – that’s almost 35% more than in the previous year. Over three consecutive hours with negative prices were still recorded in 422 cases.

You mentioned ground-mounted systems earlier. Does the problem apply to all systems in this segment?

KK: No, not everyone is affected equally. The situation is particularly critical for two groups: Existing plants that have not or only insufficiently factored in negative prices when planning – and future projects whose financing is heavily dependent on a stable yield expectation.

This is certainly not going to be a temporary phenomenon, is it?

KK: Unfortunately, yes. In the short term, the trend will tend to intensify due to the many new projects that have received funding approvals in the last two years and are now going online. Nor is a reversal of the trend to be expected in the medium term. For prices to stabilize, electricity consumption would have to increase significantly, especially in times of high feed-in. Flexible electrolysers for hydrogen production could help here – but only 8.7 GW are planned in Germany by 2030, and many of these projects have not yet received a final investment decision.

How can operators arm themselves against this development?

KK: One thing is clear: simply switching off when prices are negative prevents losses, but also the opportunity for income. It is much more effective to temporarily store the electricity generated – in other words, to combine the system with battery storage.

This allows production to be shifted in time, i.e. fed into the grid when prices are higher. This significantly increases the market revenue via the intraday market. The bottom line is that operators with a storage solution receive more production at better prices.

And we at e2m have the right solutions?

KK: Exactly. Since the introduction of the innovation tender for PV storage combinations, we have been offering corresponding products for optimized marketing and are constantly developing them further. Incidentally, this approach is not just limited to innovation projects – it can also be transferred to other co-locations.

Does this also apply to existing systems?

KK: Yes – of course, it depends on the remaining term of the EEG subsidy whether the investment in a storage system still pays off. Operators of new projects have it a little easier: they can take part in the innovation tender with the combination of PV system and storage. Compared to the often oversubscribed open-space PV tender, there is a higher funding cap here. The storage system is partially co-financed, which – with optimal design and marketing – brings a clear yield advantage.

Thank you very much for the interview, Kurt!