German Media: Summer is Coming – Europe’s Power Grid Faces Oversupply Again

In recent years, photovoltaic (PV) and wind power capacities across Europe have expanded dramatically. In countries like Germany, renewable energy now accounts for more than half of annual electricity generation. However, during the sunny summer months, PV output far exceeds electricity demand, leading to massive underutilization of power generation capacity. This issue cannot be alleviated until energy storage infrastructure and smart grid upgrades are completed.

According to Bloomberg's projections, as European nations enter summer and daylight hours increase significantly, an estimated 4 billion kilowatt-hours of generation capacity will be "wasted" over the coming months—25% more than in 2025—due to oversupply relative to demand.

This widespread "curtailment" will indirectly raise electricity costs for European taxpayers. First, newly added solar capacity across Europe has often received substantial government subsidies. Second, when supply exceeds demand, grid operators must instruct power producers to reduce or halt production, and they are required to pay these producers "curtailment compensation" fees.

Even if power producers choose not to shut down, they still face significant financial losses. During peak solar periods in summer, when supply greatly exceeds demand, real-time electricity prices can fall into negative territory. In plain terms, this means power producers must actually pay consumers to take their excess electricity.

During this year’s Easter and May Day holidays, electricity demand was already lower than usual, while many parts of Europe experienced clear, sunny weather. As a result, real-time electricity prices in Germany and France briefly dropped to as low as -0.5 euros per kWh. At such times, power producers had only two options: continue generating electricity and pay users to absorb it, or cut production and receive curtailment compensation from grid operators. In countries like Germany, this compensation is often passed on directly to consumers. However, Germany has recently introduced new regulations temporarily shifting this additional cost to federal budget funds.

This recurring summer dilemma—where either power producers must pay to offload surplus electricity or grid operators must pay compensation—has been eroding investment returns for renewable energy projects across Europe. According to Bloomberg research, after years of rapid expansion, Europe’s new PV installations reached a historical high last year, but this year’s growth is expected to decline. Bloomberg forecasts that this downward trend will persist through the mid-2030s.

Supply-Demand Fluctuations Threaten Grid Stability

Beyond economic concerns, the rising share of solar and wind power in the grid also poses major challenges to stable grid operation. Previously, conventional thermal power plants with rotating generators provided large mechanical inertia, naturally helping maintain voltage and frequency stability. In contrast, solar and wind power typically use inverters to convert DC electricity into AC before feeding it into the grid, making them more prone to sudden supply-demand imbalances. This places higher demands on grid operators’ ability to actively manage and control the system.

Last year, Spain and Portugal experienced some of the worst blackouts in decades, with voltage fluctuations identified as a key contributing factor. At the time, solar power accounted for a very high share of the grid’s total generation. Since then, grid operators have adopted more cautious strategies—reducing solar penetration levels and keeping natural gas power plants online at all times to enable rapid adjustments in output when grid instability occurs.

Urgent Need to Enhance Grid Energy Storage Capacity

Aside from curtailment, other solutions exist to address oversupply caused by high renewable penetration, such as expanding cross-regional transmission capacity to quickly redirect surplus solar and wind power to regions with higher demand. Germany long struggled with insufficient transmission capacity, preventing clean energy from its northern regions from reaching southern areas with higher consumption. However, as PV capacity in southern Germany has surged, the interregional transmission bottleneck has eased—but the nationwide oversupply problem during summer has intensified. According to estimates by the London Stock Exchange Group, Germany’s overall “curtailment rate” has risen from around 7% to 13%. Currently, Spain has the highest curtailment rate among European countries: in the first quarter of this year, the national PV curtailment rate reached as high as 16%.

Alongside expanding cross-border transmission, another effective approach involves promoting energy storage power stations and increasing grid intelligence to better manage short-term fluctuations from renewables. The European Commission estimates that total investment required for grid infrastructure across Europe could reach approximately 1.2 trillion euros by 2040. Additionally, Bloomberg predicts that by 2030, Europe’s power storage capacity could grow fourfold.

However, until investments in energy storage and grid modernization accelerate significantly, a substantial amount of clean electricity will continue to be wasted due to curtailment and remain underutilized.

Source: DW

Original Article: toutiao.com/article/1865436015533066/

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