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Europe’s acceleration towards decarbonisation slowed last year despite record levels of solar power generation. That was the standout highlight in the latest report on the European electricity market from energy market analysis provider Montel EnAppSys.
Overall renewable generation in 2025 (1,3332.8 TWh) was lower than in 2024 (1,375.1TWh), primarily due to lower levels of wind and hydro output. Wind generation dropped 4.3% to 511.4TWh, while electricity generated from hydro fell 11% to 427.4TWh, mainly due to low levels of rainfall which left reservoirs across Europe depleted.
Record high solar generation was observed as 2025 was an exceptionally sunny year. The 284.5TWh recorded was 13.5% higher than the total in 2024 and almost three times the 96.7TWh recorded in 2016.
Jean-Paul Harreman, Director at Montel EnAppSys, said: “The contribution of fossil fuels to total power generation climbed to 27%, while renewables’ share dropped to 73%.
“Despite the record solar output, the overall decline in renewable generation was highlighted by particularly low output in the first quarter. This was the lowest Q1 figure recorded since 2023. Fossil fuel generation trends were also somewhat mixed last year. Whilst we observed the lowest coal/lignite generation on record, this was offset by a rebound in gas generation, which rose compared to the levels seen in 2023 and 2024.
“Looking forward, forecasts show that we’re likely to see the highest solar generation for any Q1 on record this year, although grid-scale producers are starting to see threats from ever-lower capture prices and more curtailment of wind output, due mainly to a lack of storage and negative prices.”
The trend of negative power prices continued across Europe last year too, with more than 500 hours of below-zero prices seen in six European countries. The SE2 Swedish price zone saw the most, with 679 hours in total, followed by the Netherlands, Germany, and Spain, with 584, 573, and 556 hours respectively. France and Belgium were not far behind, with 519 and 509 hours each.
This trend was exacerbated by the increasing build-out of wind and solar capacity and a lack of demand-side response. As renewables displace conventional power during the solar peak, the demand for fossil generation and imports later in the day has significantly widened the price gap between the solar peak and the evening peak.
Jean-Paul Harreman said: “Consensus is divided on whether the rise in negative prices represents market dysfunction or simply an incentivising of flexibility via price signals. The main causes are intermittent renewables, which can create a surplus of electricity on especially sunny or windy days, and a lack of storage and flexibility from demand and must-run generation assets. The majority of such hours occur in the summer, when demand is lower and solar output higher. These trends are experienced simultaneously across multiple parts of Europe, which causes difficulties when countries attempt to export away excess generation. This year we are likely to see even more instances of negative prices, as demand remains stable while solar and wind capacity continue to outgrow development of flexibility.”
The report also said that the early part of this year is likely to be characterised by volatility in gas markets driven by weather and geopolitical turmoil, continued growth in solar and weakness in hydro production, as well as further growth in the number of negative price hours. There is also the possibility that Dunkelflaute periods, which occur on cold days with little wind or sun, could cause extreme price spikes during the rest of this winter.
Jean-Paul Harreman said: “These dynamics highlight a complex reality: Europe’s weather-driven power system can experience record low prices alongside extreme evening peaks, driven by fossil fuel prices, exposing technical, economical and geopolitical vulnerabilities in price formation.”
Download the report HERE.
