Panellists gathered together by NPM on May 19 for the latest edition of our European Development & Finance Forum in Hamburg, Germany spent much of the day contemplating the impact of negative pricing on business cases, the ever-increasing role for co-location within renewables portfolios, as well as the evolution of the data centre market, among other aspects.

Heading the day with a keynote address, European Energy CEO Knud Erik Anderson laid out his company’s approach to dealing with a fast-evolving market that is producing difficult conditions for solar generation assets, such as curtailment.

“We don’t think that build-out of the grid is the solution to curtailment, we think the answer is batteries,” said Anderson.

Furthermore, the evolution of specifications now available for BESS is providing welcome increased capabilities for operators, with both equipment costs expected to continue falling while asset duration hours are increase to around eight hours.

“At eight hours, you can more or less create baseload around the clock,” added Anderson.

The first full panel discussion of the day, concentrating on The European Development Landscape, mulled congested grid queues, co-location opportunities and the continued difficulty in achieving satisfactory project exits.

But, Germany’s mature operational onshore wind fleet is offering a means to circumvent development roadblocks, according to Thomas Gummer, partner at Eight Advisory.

“If you have the right assets where repowering makes sense, you can substantially increase the time to market; development is much faster. (Across portfolios) you can also use ongoing cashflow to subsidise that and achieve more interesting revenues,” he said.

Negative price concerns

Talk moved on immediately afterwards to the PPAs, Offtakers and Negative Pricing session where the latter topic encouraged debate to flourish throughout the discussion.

“Corporates will start on the basis of not wanting to pay anything during negative hours… the spread between paying always and paying never during negative hours in Germany is EUR 5-8 /MWh,” said Philip Meissner from Engie.

“The spread in Poland is EUR 10 /MWh,” replied Goldenpeaks Capital’s Mathieu Ville, “But Poland could have the share of negative prices drop through to 2030. As a more established [capacity] market, it makes future forecast figures more sustainable,” he added.

The more oft-discussed scenario for negative pricing is a midday crash due to solar saturation which, for wind developers such as Nadara, could provide an opportunity, according to the company’s Maria Mura.

“Being active in onshore wind gives us an advantage, there is a big demand from corporate offtakers who see wind as a premium tech, not just a way to protect from negative pricing but also a hedging tool,” said Mura.

As development prospects occasionally hit snags in Western Europe, it is tempting to peer into the opportunities further east, which the next session of the day – focused entirely on the CEE Renewables Market – afforded delegates some insight on.

However, typical BESS structures and regulatory regimes can sometimes veer quite far away from corresponding frameworks in the rest of Europe, as was explained by Renalfa Solarpro CEO, Ivo Prokopiev.

“In Eastern Europe, it’s a different ball game. Mostly it’s a wholesale market; buy cheap, sell high. Unlike the west which has grid services contracts,” he said.

This point was also underlined, from the opposite perspective, during the Financing & M&A Market panel where Tom Smout, head of storage at LCP Delta, gave his assessment of the ideal approach for battery storage revenues.

“The best BESS markets are where you combine some market signal with a contracted element,” he said, while also adding that conditions are also continuing to improve for developers further up the supply chain.

“One of the under-appreciated trends is the depreciation of the US dollar, due to the Trump effect, which has reduced BESS costs for around 10-15% of capex,” said Smout.

Supply chains

Europe’s exposure to dollar-denominated trade for equipment is due in large part to its oft-lamented relative lack of a manufacturing base for all renewables technologies, but especially solar and – more latterly – battery storage.

Maxxen managing director Ruben Valiente, during a second keynote address of the day, laid out the relevant data.

He said: “Of investment grade providers, there are 47 battery equipment partners to choose from, seven of these are from Europe, and only two manufacture in Europe.”

During the later dedicated Battery Storage session, Valiente also expressed concern about upcoming potential regulatory changes in Germany, a theme that ran right through debate across the whole day, pondering whether it could veer into a return to the dark days of retroactive amendments of decades prior in countries like Spain.

“Whatever we do, let’s not do anything retroactive. For grid fees, let’s do it going forwards, not backwards. When we were two months from COD in two of our German BESS projects, we were told we could not move forward because our grid connection was no longer going to happen, which was an unwelcome change when we’d already committed investment,” added Valiente.

Next phase for data centres

Away from renewables, the forum also found plenty of time to ponder digital infrastructure, including a dedicated panel on Building the Next Phase of Europe’s Data Centre Market.

While activity across Europe in the sector is ticking up fast, one or all of the key factors of access to land, grid and finance are often throwing up obstacles for developers to overcome.

For the latter aspect, LBBW’s Christian Felix Munz, said, “Offtake is the most important factor and there is a big change in the market. We see AI coming up fast and we clearly need new financing structures for this.”

While grid access is also proving tricky for data centre developers in lots of European countries, there are active moves afoot to smooth the operation of electricity networks, according to Watson Farley & Williams partner Christian R. Schindler.

“We are lagging behind in Germany but now there are changes to the grid allocation mechanism. There is also a lot of competition between data centres and BESS, but we are now on a good track,” he said.