European renewable capacity will see a three-fold increase by 2050, but that number will still fall short of climate goals, according to a report from Aurora Energy Research.
European Renewables Market Overview Report (ResMOR) projects that risk factors such as negative prices, market saturation, and grid congestion will hinder progress on meeting established targets.
Non-shielded renewables assets face increasing risk from negative prices with Central Europe seeing the lowest negative prices and the Nordics leading in frequency, according to Aurora’s ResMOR.
Although some countries previously offered protection against negative price hours in subsidy schemes, most now provide little or no protection, the report added.
Market saturation is another challenge which will hinder deployment.
Greece, Romania, and Great Britain are most at risk of renewables market saturation impacting the merchant business case, the report said.
Grid connection bottlenecks will also hurt renewables expansion.
In 2023, Europe saw 57.28 TWh of remedial actions for both renewable and non-renewable assets, a 14.45% increase from 2022, the report found.
Germany, Poland, Great Britain, and Ireland curtailed the most energy, with remedial actions as share of electricity demand exceeding 4% in these markets, reaching about 9.5% in Ireland according to the analysis.
Rebecca McManus, Renewables Lead, Pan-European Research at Aurora Energy Research, said: “Negative prices and grid constraints are significant risks for renewable assets in the market today, which will be further exacerbated with more renewables deployment.
“It’s vital for developers to explore opportunities to de-risk projects such as portfolio diversification to mitigate impacts.”
Jannik Carl, Research Associate, Pan-European Research at Aurora Energy Research, added: “While Spain and Great Britain boast a robust pipeline of merchant renewables, most European developers still rely on stable revenue streams and market risk protection.
“Policymakers must ensure strong incentives and flexible frameworks-like combining subsidies with PPAs and offering curtailment protection-to drive the sustained growth of renewables and achieve Europe’s Net Zero climate goals.”