Published by Greenconexa Oy | April 2026
Executive summary
Between 2022 and 2025, the average prices captured by solar farms in Europe fell sharply — in Germany, from roughly 98% of baseload to 54%; in Spain, to around 49%. The mechanism is called cannibalization: as more solar capacity is installed, spot prices collapse precisely during the hours when solar generates. For developers, banks and infrastructure funds, the practical consequence is that financial models which worked in 2022 now produce unrealistic IRRs. This article explains the mechanism, the current market data, and the changes this forces on pre-development methodology.
1. What “capture rate” means and why it matters for bankability
The capture rate is the ratio between the average price actually realised by a solar farm on the spot market and the baseload price (the arithmetic mean of hourly prices over the same period). A capture rate of 100% means the farm sold energy at the market average. A capture rate of 54% means the farm earned just over half of the baseload price.
For pre-development, this indicator is critical for three reasons:
- Financial models use baseload as the reference price. If the projection ignores capture rate, revenues are systematically overstated.
- Banks adjust DSCR based on estimated capture rate. A project that looked bankable at 80% capture rate is no longer bankable at 55%.
- The PPA price offered by off-takers reflects their capture rate expectations, not baseload. The decoupling between signed PPA prices and published baseload prices is now structural.
2. What happened between 2022 and 2025 — the numbers
The data is publicly documented and leaves no room for optimistic interpretation:
- Germany: annual solar capture rate fell from ~98% in 2022 to 59% in 2024 and ~54% in 2025. In Q2 2025, the quarterly average hit a historic low below 33%, with a captured price of €18.43/MWh in June — a level comparable to the pandemic collapse of May 2020.
- Spain: solar capture rate of ~49–54% in 2025, stabilising after a sharp drop in 2024. In June 2025, the monthly capture rate fell to 0.43.
- France, Netherlands, Greece: year-on-year declines of 13–17% in 2025, indicating the phenomenon is spreading beyond traditionally exposed markets.
- Finland, Italy, United Kingdom: capture rates still high (86–90%), but for structural reasons — low solar share in the generation mix, cross-border interconnections, or favourable demand profiles.
The trend is non-linear. S&P Global projections suggest Spanish solar capture rates will fall below 20% after 2026, rising back above 25% only after 2040. For a project with a 25–30 year life, that window covers the majority of cash flows.
3. Why it is happening — the mechanism, not just the symptom
Cannibalization is not a market accident. It is the arithmetic result of three mutually reinforcing factors:
- Simultaneous generation profile. All solar farms in a region produce during roughly the same hours. Supply concentrates, the marginal price falls.
- Bidding at negative prices. Subsidised farms (EEG in Germany, CfDs in other markets) bid at the market floor (−€500/MWh in Germany) to guarantee dispatch. In 2024, nearly 20% of German solar output was affected by negative-price hours.
- Mismatch between solar expansion and storage/flexibility expansion. The Enervis base-case scenario for 2025–2030 projects 390 GW of new renewables in Europe, but only 93 GW of added storage. The structural ratio is wrong.
The result: solar becomes, more and more often, the marginal producer that sets the clearing price — and that price tends toward zero or below.
4. Implications for pre-development — what has to change in the methodology
Most solar financial models we encounter at the screening stage rely on outdated assumptions. Three corrections are mandatory:
4.1. Build in a realistic capture rate, not an assumed one
A model running on constant baseload pricing or simple linear escalation is, in practice, a fiction. The capture rate must be modelled as a declining curve over the first 5–10 years, with a stabilisation floor specific to each market. In Romania, where solar penetration is still moderate, the starting capture rate may be higher, but the trajectory will follow the German-Spanish pattern with a 3–5 year lag.
4.2. Hybridisation is no longer optional
Standalone solar is losing its status as a bankable product. Pexapark data shows that in 2025, Europe contracted approximately 12 GW of BESS under flex-PPAs — three times the 2024 volume. Banks are beginning to require co-located storage as a financing pre-condition, not a later upgrade.
4.3. PPA structure determines viability, not LCOE
The difference between a Pay-as-Produced PPA and a Baseload PPA can be larger than the difference between two competing panel technologies. A sophisticated off-taker is no longer buying MWh generated — they are buying volume delivered during the hours they actually need it. A developer who misses this distinction signs a price that looks fine on paper and becomes unsustainable in operation.
5. Conclusion — the question that must come first
For a solar project in pre-development in 2026, the question “how many kWh per year does it produce?” is secondary. The primary question is: in which hours does it produce, at what captured price, and how much of that price remains after cannibalization adjustment over a 25-year horizon?
This is the logic Greenconexa applies within the ERSF (Early-Stage Renewable Screening Framework) — a financial-viability filter applied before any resources are committed to permitting, grid connection or land agreements. A project that fails this filter is not a project to be deferred; it is a project that does not exist.
Sources
- Pexapark — Capture Factors Show Early Sharp Declines (April 2025): pexapark.com
- pv magazine — Enervis: Solar growth drives cross-border cannibalization in Europe (February 2025): pv-magazine.com
- Modo Energy — Solar Cannibalisation: Why Germany’s summer glut is costing consumers (August 2025): modoenergy.com
- S&P Global — Price cannibalization hits German solar in Q2 (July 2025): spglobal.com
- S&P Global — Lower costs, higher prices may revive European PPA market in 2026 (January 2026): spglobal.com
- Energy Risk — Next-gen PPA contracts reshaping European power markets (March 2026): energyrisk.com
- Timera Energy — Focus shifts to hybrid PPAs as solar capture prices plunge (November 2025): timera-energy.com
- Modo Energy — What to Expect for Solar in Spring 2026 (January 2026): modoenergy.com