When daylight hours increase in spring, increased solar production in Europe pushes down power prices during the day, creating a dip that’s also known as an inverted peak.
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Published Mar 27, 2025 • 2 minute read
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(Bloomberg) — When daylight hours increase in spring, increased solar production in Europe pushes down power prices during the day, creating a dip that’s also known as an inverted peak.
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This year it’s more pronounced than usual and the prospect of a strong solar season following a boom in new capacity is weighing on summer prices too.
Power contracts are divided into baseload, covering all the hours in a 24-hour period, and peakload, for weekdays between 8 a.m. and 8 p.m. In winter, peakload is usually more expensive, but the expansion of solar power in Europe means peak prices can drop below baseload when it’s sunny.
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Average peak rates have been about 10% less than baseload so far this month, according to data from Epex Spot SE. That’s a bigger gap than normal, and prices for spring and summer months are falling too amid expectation for greater solar generation going forward.
Europe’s solar output has boomed in recent years after high gas prices and declining panel costs made it a more attractive opportunity for investors — contributing to more frequent bouts of below-zero prices. Germany is set to add an unprecedented 17 gigawatts of solar capacity this year and continue to break that record each year until at least 2030, according to BloombergNEF.
Peak demand usually happens in the early evening when solar begins to drop. As installations continue apace, Europe needs to find a way to use the cheap, green electricity during the day while avoiding falling back to fossil fuels during the evening.
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“These inverted peak-base spreads are very atypical this early in the year and I think that this prompted some traders to sell off summer peaks,” said Sabrina Kernbichler, an analyst at Energy Aspects Ltd.
German power contracts for months ranging from April to August have dropped by roughly €5 ($5.40) a megawatt-hour in the past week, a bigger decline than for the winter months of November and December.
“We expect a rise in solar generation to boost renewable generation and ease European power prices in the short term,” said Jason Ying, a commodity strategist at BNP Paribas SA.
The bank on Wednesday lowered its outlook for German second-quarter prices to €75, though sees some upside for next winter due to a demand recovery and higher prices for natural gas — the main driver of the electricity market.
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