In Germany, the market for solar power purchase agreements (PPAs) has plummeted by 87%, leading experts to suggest that hybrid solar-plus-storage projects may be the only viable financing option moving forward. The decline in standalone solar project financing is attributed to price cannibalization and instances of negative pricing during peak solar generation hours, which are making traditional solar assets less appealing to banks. As financing becomes more difficult, developers are increasingly focusing on projects that integrate large batteries alongside solar energy systems.
Europe’s renewable energy market is faltering under the weight of its own success. The era of developing standalone solar projects backed by PPAs may be coming to a close, as midday solar generation sees price cannibalization and negative-price hours across multiple regions. While still a relatively nice problem to have versus too little generation for decarbonization and general progress in terms of clean energy, it’s still a quandary. And those with funds – banks – are clearly clutching the purse strings tighter, which is making standard solar assets more challenging to finance. Hence, opportunities around colocation with large batteries.