Europe’s transition to renewable energy is accelerating, with renewables supplying 45.5% of the European Union’s electricity during the first quarter of 2026, according to Eurostat. Wind power accounted for the largest share of renewable generation at 44.9%, followed by hydropower at 28% and solar at 17.3%. Rising oil and natural gas prices linked to the conflict involving Iran have reinforced the economic value of domestic renewable energy, encouraging European countries to continue reducing their dependence on fossil fuels. At the same time, the rapid expansion of wind and solar power is creating new challenges for electricity markets, particularly during periods when renewable generation exceeds consumer demand.
One of the most significant consequences of this growth is the increase in negative electricity prices. These occur when electricity supply exceeds demand, causing wholesale prices to fall below zero. Since solar and wind generation depend on weather conditions rather than electricity consumption, periods of abundant sunshine or strong winds can produce more electricity than the grid requires. In these situations, renewable energy producers may reduce output or temporarily switch off generating facilities, a practice known as curtailment. When this decision is based on financial considerations rather than transmission constraints, it is referred to as commercial curtailment.
A new analysis by energy market intelligence provider Montel found that commercial curtailment declined across most European countries during the first half of 2026 compared with the previous year. Germany, however, stood out as the major exception. Commercial curtailment increased by 20%, rising from 1,216 GWh to 1,463 GWh, even though the number of negative price hours declined by 23%. This indicates that renewable generators are becoming more likely to switch off production whenever electricity prices fall below zero.
The increase is largely linked to policy changes. Under Germany’s Solar Peak Act, also known as the Solarspitzengesetz, renewable projects commissioned after February 2025 immediately lose subsidy support whenever wholesale electricity prices become negative. At the same time, the country’s introduction of quarter-hourly day-ahead electricity auctions has increased the frequency of short periods of negative pricing. Together, these market reforms create stronger financial incentives for renewable operators to curtail production rather than continue generating electricity at a loss.
Other European countries experienced the opposite trend. France reduced commercial curtailment by 32% despite recording more negative price hours because its subsidy system continued rewarding renewable generators for producing electricity. A late-June heatwave also increased electricity demand for cooling, reducing excess midday generation. Finland recorded the largest improvement, with commercial curtailment falling by 89% as lower water availability in Nordic reservoirs increased wholesale electricity prices and largely eliminated oversupply. The Netherlands, Belgium, Switzerland, and Poland also reported declines.
Experts argue that future success will depend on improving electricity system flexibility rather than simply adding more renewable capacity. Germany illustrates how market rules can strongly influence renewable generation decisions, while battery storage, demand response, and flexible pricing mechanisms can reduce wasted electricity. Commercial and industrial battery storage capacity is expected to nearly triple between 2026 and 2028, and the International Renewable Energy Agency concludes that combining batteries with renewable energy can provide reliable, cost-competitive electricity around the clock. Smart meters, flexible time-of-use tariffs, and greater electrification of homes and transport can further increase demand during periods of abundant renewable generation. These measures would reduce commercial curtailment, improve grid efficiency, and help Germany and the rest of Europe maximize the benefits of their expanding renewable energy systems.