Over the past decade, hundreds of millions of solar panels have been installed from Sicily to Lapland, turning what was once a niche technology into Europe’s biggest source of power during the summer months.
That rapid buildout is now running into a new problem: The system around it hasn’t kept up. Capacity growth is slowing, financial returns are falling and a record amount of electricity is being wasted because grids can’t handle the surge in output.
With longer daylight hours, the solar season is in full swing. Capacity added over the past year has expanded the generation base and records have already been broken this spring in major markets including Germany, the U.K. and France. More are expected in the months ahead.
That’s more electricity than the region can use with producers increasingly being forced to shut down plants for hours at a time on sunny days — a practice known as curtailment. In the coming months, about 40 terawatt-hours of electricity, enough to power Greater London for a year, could go to waste.
That’s up by a quarter from 2025.
As a result, Europe’s already stretched consumers can end up paying twice: first for the subsidies that fueled the solar boom, and again when producers are compensated to switch off as supply overwhelms the grid. The glut is also pushing power prices deep below zero during those peak solar hours, when the surge in production exceeds demand. Projects that looked like safe bets just a few years ago are now being reassessed.
“The assumptions that underpinned solar investments during and just after the energy crisis are no longer holding,” said Axel Thiemann, chief executive officer of Sonnedix BV, which has projects across Europe. “Negative prices as well as curtailment are eroding returns.”
Solar was first commercialized in the 1980s and its success has largely been driven by subsidies. It now spans rooftops and fields across the continent — even at Windsor Castle and the Vatican. The technology accounts for the region’s largest installed capacity at roughly 490 gigawatts, surpassing gas, wind, nuclear and coal.
And the buildout is set to continue, although at a slower pace. Around 80 gigawatts is expected to be added this year alone, equivalent to installing roughly six panels every second.
The market refers to the solar cannibalization effect, which occurs when large volumes of solar power cause prices to plummet during sunny periods, reducing the revenue and value of projects. The more capacity that’s added, the bigger the effect.
It’s starting to show up in the number of parks being built. After years of rapid expansion, overall European installations of new solar capacity are expected to fall slightly from the record reached last year, with further declines projected almost every year until at least the middle of the next decade, according to BloombergNEF.
Large amounts of solar can make both frequency and voltage harder to manage. The former is the grid’s rhythm, while the latter controls how strongly electricity flows to homes and businesses.Traditionally, large spinning turbines helped maintain this balance, but solar typically operates differently, making the system more sensitive to sudden shifts in supply and demand and requiring more active control.
Voltage fluctuations were one of the key causes of Europe’s worst blackout in decades in Spain and Portugal last year. It happened at a time when there was a large amount of solar on the system.
Since then, grid operator Red Electrica has become more cautious, keeping gas-fired plants online for backup and relying less on solar.
Negative prices have been more pronounced this spring with hourly prices plunging to around minus €500 ($586) per megawatt-hour in Germany and France. The lowest negative prices tend to come when high renewables output combine with below-normal demand.
That was the case this year both during Easter and on May 1, which is a holiday in many European countries.
When prices fall far below zero, solar park operators tend to shut down on their own initiative so they don’t pay consumers to take power. That means they earn nothing.
However, when grid operators order solar parks to go offline, firms are typically compensated. In Germany, Europe’s biggest solar market, those costs ultimately fall on consumers, though they are currently being absorbed by the federal budget to ease the burden.
Germany is one of the nations where curtailment first emerged. It was initially associated with wind power in the north that couldn’t be transmitted south due to grid constraints. But more recently, solar in the south has faced the same issue after the huge expansion, said Leonhard Gandhi, a researcher at Fraunhofer Institute.
Bavaria, one of Germany’s economic engines, has branded itself a “solarland,” with installed capacity rivaling Spain’s. The state now has so much solar that, at times, it produces more power than the grid can handle — forcing frequent interventions and placing it among Germany’s most congested regions after the wind-heavy north.
In key markets, the problem is worsening.
About 16% of solar generation was curtailed in the first quarter in Spain, roughly double the level from a year earlier. Germany has seen an increase to around 13% from 7%, according to estimates from London Stock Exchange Group.
For utilities and governments, the main challenge used to be building enough capacity, but the industry now needs to urgently focus on areas that have lagged behind, such as stronger grids and batteries. The European Commission estimates around €1.2 trillion of grid investment will be needed by 2040. Storage capacity in Europe is expected to grow fourfold by 2030, according to BNEF.
The German government plans to create incentives to combine solar parks with batteries. Swedish utility Vattenfall is one firm that’s already doing that. On prime agricultural land in Mecklenburg-Western Pomerania, thousands of hens and chickens roam freely under the 146,000 modules at one of the company’s solar farms. The company plans to add batteries to absorb surplus power next year.
Expanding capacity, grids and storage together is important as the war in Iran is threatening another energy crunch. The region’s dependence on imported fossil fuels is once again exposed.
“The only way to get out of that dependence and the price spikes that we see is to have more electricity production, grid and flexibility in Europe,” said Vattenfall CEO Anna Borg, calling for a “balanced pace” in the expansion of these three sectors.
At peak times, solar generation can meet nearly all consumption on its own in some places. In Germany, residual demand — what remains after renewable output — can fall close to zero around midday in summer. It underscores both solar’s dominance and the difficulty of managing it without sufficient system flexibility.
Policymakers are beginning to adjust by scaling back some support in an effort to reduce distortions. Subsidies for negative hours will become less common, which could result in fewer extremely negative prices, said Michael Schrettle, an analyst at Volue.
But until storage and grid investment pick up pace, more clean electricity will continue to go unused.
As the CEO of German utility EON, Leonhard Birnbaum, put it: “Solar panels that cannot feed electricity into the grid do not offset a single ton of CO2.”
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