I was genuinely shocked a few weeks ago when I heard that the German solar developer and independent power producer, Enerparc, had filed for insolvency proceedings in Germany. For me, Enerparc was always one of the best solar companies in Europe, a company with a strong reputation, a long history, a very substantial portfolio and a strong entrepreneurial-led team. My immediate reaction was that if a company like Enerparc can get itself into this level of difficulty, then something much bigger must be happening in the European electricity market. And then, when I reflected on it, I realised that there were other players in the German market, such as BayWa, ABO Energy, PNE and SOWITEC, also facing financial stress. And that is not to say that the stress is confined to Germany. There are businesses right across Europe from Sweden to France and Spain under pressure. This got me thinking about whether there is a common issue across Europe, and my conclusion is a blunt yes and the asnwer is that he European power market has changed far faster in recent years than many of the renewable business models, financing structures and asset-management approaches built around it have. This blog is about what has gone wrong, why volatility, negative pricing and falling capture prices are becoming structural issues, and what renewable asset owners need to do differently if they are going to thrive in this new world.

For most of the last twenty years, the major energy objective across Europe was relatively straightforward, and that was to build massive amounts of renewable generation, driven by EU targets and national support schemes. The result has been an incredible build-out so much aso that and in 2025 renewables supplied circa 50% of electricity consumed in the EU. But the problem is that we have been much less successful at building the grids, storage, market structures and commercial capabilities required to manage an electricity system increasingly dominated by all of this weather dependent renewable generation. And the consequences are becoming increasingly visible because as we have moved into an electricity market characterised by far greater volatility, growing congestion, more frequent negative pricing and an accelerating cannibalisation of renewable revenues. The result is that the key question is no longer simply how much electricity a power plant produces, but when it produces it, where it produces it and, most importantly, what that electricity is worth when it reaches the grid.

The German power market is a good place to see the reality of this world. In 2025, the country experienced 573 hours of negative day-ahead electricity prices, when the wholesale market price fell below zero, up from 457 hours in 2024. A major reason for this is solar, as increasingly what we are seeing is that when the sun shines, electricity can be almost worthless (so called capture price for that electricity sold) and then become extremely valuable only a few hours later. Low demand and other inflexible generation also contribute, so this is a wider system issue and not just a solar problem and for most of the last twenty years that did not matter nearly as much because renewable asset management was mainly an engineering exercise, particularly where assets were sitting behind feed-in tariffs, subsidy regimes or long-term PPAs, and the objective was relatively simple, which was to maximise production and keep operating costs under control.

The other part of the renewable business model was the focus around yield compression with power plants seen as financial products rather than energy assets. Early-stage developers sold projects to late-stage developers, which took them through construction and sold them to IPPs, which in turn accumulated portfolios of operating assets before selling them to low-cost capital providers such as pension funds, which wanted predictable, low-risk returns as well as green credentials. Each step reduced risk and compressed the required yield, while the business model remained focused on building and financing assets that could deliver stable cash flows, rather than actively managing how and when they generated and sold electricity.

This brings me back to Enerparc and the other European developers because the lesson from what is happening is not necessarily that the underlying power generation assets are bad, because the solar parks and wind turbines still work, or that their development projects are worthless, but rather that the businesses, financing structures and revenue assumptions sitting around those assets were created for a very different world. And the bottom line is that business model is now broken and there is now more risk around investing in the European renewables market than ever before.

So what should asset owners do now?

For me the starting point is that every renewable owner needs to go back and fundamentally reassess the revenue assumptions across their portfolio because underwriting assets on long-term average electricity prices is increasingly dangerous when what really matters is the capture price, meaning the price you actually get when you produce, negative-price exposure, curtailment, imbalance and the shape of prices through the day.

Capital structures also need to be revisited because leverage which looked perfectly sensible when interest rates were close to zero and renewable revenues were relatively predictable can become extremely dangerous when cash flows become volatile, and boards therefore need to ask much harder questions about refinancing risk, liquidity buffers, covenant headroom and whether project structures leave enough flexibility at the corporate level when something goes wrong.

Energy storage also needs to stop being treated as an optional add-on and instead become part of the core thinking around all renewables assets because batteries fundamentally change the economics of intermittent generation by allowing electricity to move through time, which means that a solar asset no longer necessarily has to sell its electricity into an oversupplied market at lunchtime but can increasingly move some of those electrons into the evening when they may be worth significantly more.

But storage on its own is not enough because asset owners also need to build or acquire genuine commercial optimisation capabilities, and that means the future asset manager can no longer simply manage O&M contracts, insurance policies and technical availability but increasingly needs to understand trading, PPAs, balancing, power buyers, ancillary services, battery dispatch, congestion, grid constraints, weather forecasting and market signals. And then comes high-quality data and AI because as the electricity system becomes more complex they become critical tools to managing those assets effectively.

Power purchase agreements or PPAs also need to be rethought because the old idea that a good PPA was simply a contract with an attractive headline price is becoming increasingly outdated, and buyers now care much more about when the electricity is delivered, who carries imbalance risk, what happens during negative-price periods and who ultimately bears capture-price risk, which means the PPA market itself is moving from simply contracting renewable volumes towards much more sophisticated revenue-risk management. Alongside this, developers and asset owners need to get much closer to their customers, understand how and when they use electricity, build private-wire connections and develop direct relationships with new sources of demand such as data centres, because the value will increasingly come from matching generation to customers’ needs rather than simply producing power and selling it into the market.

There is, however, another side to all of this and that is that disruption creates opportunity, and the financial stress now emerging across parts of the European renewables sector is likely to bring some of the most interesting acquisition opportunities we have seen in years. Out of this cycle, a new generation of utilities will be born, businesses built around renewables and able to manage, store and deliver power in ways that will revolutionise the energy system and drive the clean electrification of Europe in the coming years.

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