The Europe edition

2024 pricing dynamics across European markets

The focus for this week is Europe as we take a look at some of the market dynamics that are driving energy investments across the continent.

Despite sharing a blue lane at the airport, in many cases a common currency, and despite being a heavily interconnected system, when it comes to Europe’s electricity markets there are still as many differences as there are culinary preferences. These differences provide distinct opportunities for folks looking to make investments in the energy transition.

Some of these are obvious: Spain is sunnier than Poland, Norway has more hydro than the Netherlands. Some are driven by long standing policy decisions, France has a lot of nuclear power, Germany has less and less, Norway has a very large number of EVs. Some are driven by historical quirk: Germany has over 800 distribution network operators (!) as the energy system was built up from a series of municipal microgrids back in the day. Some countries are still heavily reliant on fossil fuels either because they have (had?) close ties to Russian gas or because they have significant coal deposits.

The graphic below summarises how these differences play out in a handful of current metrics relevant to energy investors in the region. Wholesale energy prices: Italy has the most expensive electricity in Europe on average due in part to its heavy reliance on gas. But in general, the further east you go the higher average prices are. The Nordics are runaway winners when it comes to low prices, which results in large part to their access to hydropower. 

Volatility: Reflected here as the average daily spread, is the difference between the lowest and highest priced settlement periods in a day. Romania, Hungary and Bulgaria have shown spreads north of €150 over the last 12 months, which is good for storage assets that are able to “buy low and sell high”.

Solar PV Capture Prices: Not surprising, given the high average prices, Italy takes pole position followed by Greece. Both countries are also blessed with decent weather meaning that solar yields are high. 

Solar PV and BESS Capture Prices: Given solar investments benefit from consistently high middle-of-the-day prices and battery investments benefit from high spreads, it’s the countries that combine those traits that come out on top for a co-located solar and BESS investment. Greece leads the pack, with Italy’s southern pricing zone just behind.

Important note: for the purposes of simplicity these numbers focus on day-ahead wholesale prices. In reality intraday prices, balancing prices, ancillary markets, certificates markets, capacity markets and networks all potentially form part of the cost/value stack for these investments. 

Configuring European frequency markets in Gridcog

In this video Ashok from our Industry Team steps through how the main European frequency markets work and how to configure them in the Gridcog library. In particular, aFRR is interesting as it has separate Availability and Activation prices - check it out 👇 

Industry Insights: German Energy Storage Index

Battery storage benchmarking services are a trendy topic at the moment and Germany is no exception. These are useful tools for potential investors as they allow them to recognise what assets are likely to have earned in a specific market, and which assets might be under or over performing. 

One example is from the team at Regelleistung Online with a grab from their website included below. Little wonder there’s huge interest in the German storage market at the moment with prices like those! Despite having come off a bit during 2024, the annualised revenue is still hovering around €200k/MW for a 2 hour asset. To put that in context, in the GB market that’s more like €48k/MW, and in Australia €100k/MW.

Product Corner: Multi-currency support

Did you know that Gridcog has full support for modelling your projects in multiple currencies? This can be particularly useful if, for example, you receive CAPEX costs from an OEM that might be in US dollars but you want to model your project in Australian Dollars. Or in Europe where you’ll often be mixing project pricing in Euros with local currencies. Just pick the final currency that you’d like to see in the cash flows and the software will take care of the rest. 

Solar and Storage Live Barcelona - 13th November

Solar and Storage Live moves to Barcelona next week and our Director of UK and Europe, Genna Boyle, will be there sharing her thoughts on the value of flexibility in some large and emerging European markets. If you’re in Barcelona, get yourself to the exhibition centre for 11:40am local time on November 13th. 

That’s all for this week. If you’d like to see how Gridcog can model your energy projects, click here to book a call with our team.

Or, if you have any interesting project use-cases you’d like to see modelled in Gridcog, email our marketing magician dan.pearson@gridcog.com and we’ll spin it up!