In the first quarter of 2024, the average year-on-year decline in electricity prices was observed across 10 European markets. Realized electricity prices for photovoltaic (PV) systems in 2023 varied between 46 and 111 euros per megawatt-hour (MWh). Meanwhile, the prices for energy storage utilizing a two-cycle strategy saw a substantial 36% increase in 2023. However, European renewable energy assets faced a decrease in revenue from wholesale power markets the previous year due to a cooling of day-ahead electricity prices following a drop in gas prices from the energy crisis highs.

Despite the overall decline in electricity prices, wind power managed to maintain the highest real prices in six out of the ten countries analyzed. Interestingly, in all markets except Spain, the real prices for PV systems were lower than those for onshore wind. The rise in PV penetration is leading to increased electricity price volatility, particularly during the summer months. This volatility is creating opportunities for arbitrage with battery storage, allowing for charging when electricity prices are low and discharging to the grid when prices are high.

In both Germany and the Netherlands, real prices for energy storage exceeded those of wind and PV systems. Despite this, real prices for most technologies remained relatively consistent with baseload electricity prices. In 2023, Italy and the UK reported the highest realized prices for PV and wind, averaging around €127 ($138)/MWh and €109/MWh, respectively. Furthermore, the storage sector is rapidly growing in Germany and the Netherlands, with realized prices averaging €100/MWh and €92/MWh, respectively. Notably, realized prices for offshore wind farms in Europe were slightly higher than those for onshore wind farms, with Germany showing the largest premium at 8%, followed by Sweden (6%) and the Netherlands (5%).

The rising popularity of PV systems is leading to an increase in energy storage asset scalars in certain countries, owing to the expansion of PV infrastructure. Markets with a higher penetration of PV recorded the best energy storage asset scalars in 2023 compared to previous years. These scalars indicate the ratio between realized prices and baseload prices and serve as a key metric for assessing the performance of energy storage assets. In Spain, for instance, energy storage scalars more than doubled between 2019 and 2023, while PV scalars experienced a 20% decrease during the same period. Similar trends have been observed in Germany, the Netherlands, and Belgium since 2023, reflecting the evolving landscape of renewable energy markets in Europe.

Overall, the European energy market is experiencing a shift in dynamics, with fluctuations in electricity prices impacting the revenue generated from renewable energy assets. The increasing penetration of PV systems is contributing to heightened price volatility, creating opportunities for energy storage technologies to optimize charging and discharging strategies. While wind power continues to command high real prices in several countries, PV systems are gaining ground and driving changes in the energy storage sector. With advancements in technology and the push towards a greener energy transition, the European renewable energy market is poised for further evolution in the coming years.