Germany, Great Britain and Bulgaria are the most attractive co-location investment markets in Europe for 2026, according to Aurora Energy Research’s latest European Co-location Markets Attractiveness Report, which assesses 20 regions across the continent.
The report highlights the growing importance of co-located renewable and storage projects as European power markets face increasing grid congestion, curtailment and price volatility driven by rising renewable penetration.
Germany ranked first in Aurora’s assessment due to its large market size and strong internal rate of return (IRR) upside potential compared with standalone renewable projects. Great Britain and Bulgaria shared second place, with GB benefiting from a large installed base and a Contracts for Difference (CfD)-backed project pipeline, while Bulgaria stood out for its subsidy support, favourable economics and strong development pipeline.
Aurora also identified Spain, France and Hungary as key markets to watch as regulatory reforms and grid access challenges continue to reshape investment opportunities.
“As renewable penetration accelerates, grid congestion, curtailment and price volatility are becoming defining features of Europe’s power markets,” said Sameer Hussain, Research Senior Analyst at Aurora Energy Research. “Co-location is no longer a niche solution: it is increasingly critical to protecting project economics and sustaining investment momentum.”
According to Aurora, Europe’s co-located renewable capacity reached 6.3 GW in 2025, with solar-plus-storage projects accounting for more than 60% of deployments. Spain, Great Britain and Germany currently lead in total installed co-location capacity, while Bulgaria and Romania stand out relative to market size, with co-located solar representing more than 40% of installed photovoltaic capacity.
The report underlines the growing pressure on Europe’s electricity grids. More than 1,600 GW of renewable and storage capacity is currently awaiting grid connection across Europe, including around 550 GW in Great Britain alone. In several markets, including the Netherlands, Greece and Hungary, co-location is increasingly being used to improve grid access and reduce network-related costs.
Aurora noted that negative power price hours increased sharply in 2025, with Spain, the Netherlands and Germany each recording more than 500 hours of negative pricing. Capture price cannibalisation is also expected to intensify over the coming years, particularly in solar-heavy markets such as Iberia.
The consultancy forecasts solar discounts in Iberia approaching 50% by 2030, while onshore wind discounts in Germany could exceed 25%. At the same time, renewable curtailment across key European markets is expected to rise from more than 10 TWh in 2024 to around 33 TWh by 2030.
Against this backdrop, co-located battery storage is increasingly viewed as a way to mitigate revenue risks by shifting generation to higher-value periods, reducing curtailment and improving capture prices.
“Co-location is not a one-size-fits-all investment across Europe,” said Jörn Richstein, Research Lead for Pan-European Power Markets, Policies & Technologies at Aurora Energy Research. “In some markets it is driven by merchant upside, in others by subsidy-supported stability, and elsewhere by the need to overcome grid constraints and limit curtailment.”
The report also highlighted the growing role of hybrid power purchase agreements (PPAs). Although still at an early stage, Aurora said the hybrid PPA market gained momentum in 2025, with more than 700 MW contracted across Europe.
Spain currently leads hybrid PPA activity, but Aurora expects the greatest value uplift in France and Portugal, where hybrid and peak-shaving structures could increase contracted volumes and improve PPA capture values by up to 50% compared with traditional pay-as-produced agreements.