Spring has arrived, breathing new life into us all and bringing good news from the power sector. In the first quarter of the year, Europe has witnessed a notable blooming of renewable energy, with solar power generation achieving a historic milestone.
For the third consecutive month, solar has contributed more than 10% to the electricity mix—a clear indicator that investments in renewable capacity are paying off. This solar uptake is further underlined by the record-breaking renewable capacity additions of 65 GW for 2024, setting the stage for an even more robust performance as spring unfolds. The combination of longer, sunnier days and strategic capacity expansions has reinvigorated the share of renewables in the electricity mix, pushing Europe closer to its decarbonisation goals.
2025 European power trends (so far)
The early months of 2025 have brought a mix of encouraging trends and ongoing challenges. With the surge in solar, European power markets have experienced some much-needed price relief. Data from Elda, our electricity data platform, shows that in March, prices fell to around €90/MWh, a welcome decline compared to February’s peak of €126/MWh and January’s €112/MWh. This is an encouraging sign, as it demonstrates how renewable generation can help counterbalance traditional market pressures. Nevertheless, even with these improvements, the average Q1 2025 electricity price still stands 51% above Q1 2024 levels.
EU annual generation mix
At the same time, the sector’s decarbonisation progress is also being held back by an enduring dependency on fossil fuels. The intricate dance between the old and the new is becoming ever more apparent: while renewables are making significant inroads, the inertia of fossil fuels still impacts price stability and our security of supply.
While renewables have provided a counterweight, Europe’s reliance on gas and coal remains significant, particularly during periods of high demand. Fossil generation in March 2025 was recorded at 16% higher than in March of last year. This increased dependence on conventional fuels is partly attributable to the challenges of variability in renewable production and the limitations of current storage capabilities. Indeed, the slow ramp-up in flexibility and energy storage measures means that during peak demand—when wind generation falters or cloud cover reduces solar output—traditional fossil sources are still being called upon to bridge the gap, thus keeping the system exposed to price fluctuations and supply disruptions.
“Europe remains too vulnerable to fossil fuel price fluctuations, especially during periods of high electricity demand. To counter this, we must speed up the roll-out of demand-side response and storage technologies and further incentivise the use of long-term power purchase agreements.” – Kristian Ruby, Eurelectric Secretary General
Europe needs more flexibility
Flexibility—the ability of an energy system to adjust both power generation and consumption in response to signals from the grid, or the market—will be critical as renewables increasingly dominate the grid. Here’s how three pillars are shaping this critical component of the energy transition:
1. Demand-Side Response (DSR): Imagine a factory that pauses non-essential machinery during peak pricing hours, or an electric vehicle (EV) that charges when solar generation surges. This is demand-side response in action—a tool that turns consumers into active grid participants.
DSR’s potential is vast. Industrial players can shift energy-intensive processes to off-peak periods, reducing strain during shortages. Households, too, can play a role: smart thermostats adjust heating dynamically, while EVs can delay charging until wind turbines spin at full tilt.
2. Storage Technologies When the sun shines or winds blow, renewables often generate more power than the grid can absorb. Enter storage—the shock absorber that hoards excess energy for leaner times.
Europe’s storage landscape is diversifying:
- Short-term: Lithium-ion batteries dominate, responding in milliseconds to balance sudden fluctuations.
- Long-term: Pumped hydro and hydrogen storage manage seasonal shifts. Norway’s hydropower reservoirs, for instance, store summer surpluses to heat homes in the winter.
Meanwhile, the untapped star of flexibility? Electric vehicles. Our latest EVision report shows that by 2030, Europe’s EV fleet could offer 114 TWh of battery storage—equivalent to 30 million home batteries. Thanks to smart charging and especially vehicle-to-grid (V2G) technology, together with EY we estimated that, by contributing to the grid’s flexibility by sending electricity back to the grid at times of low generation, EV drivers could save €515–€2,500 annually.
3. Power Purchase Agreements (PPAs): are essentially long-term contracts between renewable generators and buyers. PPAs lock in stable electricity prices for buyers while securing revenue for renewable developers.
How to lower power prices?
As we’ve seen in the past three months, a higher share of renewables in our electricity mix, combined with more flexibility, can lower prices. But there’s more that we can do:
- Tackle Negative Prices: Negative pricing events—when renewables flood the grid and generators pay to offload power— have been steadily increasing in frequency. Scaling electric transport, heat pumps and industrial processes can absorb surplus renewable power. Batteries, demand response and green hydrogen storage can also shift excess supply to high-demand periods.
- Reform Markets: Current market designs often fail to incentivise the flexible assets needed to balance renewables. Expanding capacity mechanisms, harmonising cross-border trading and phasing out distortive subsidies (or even redirecting fossil fuel subsidies to de-risk storage and PPAs) can help improve the efficacy of the market.
- Strengthen PPAs and CfDs: Long-term contracts like PPAs and Contracts for Difference (CfDs) shield buyers and sellers from volatility. Simplifying complex PPA structures to attract SMEs and municipalities, creating government guarantees and 24/7 carbon-free energy granular PPAs can all help lower prices.
Flexibility fuels security
Europe’s renewables revolution is unstoppable, with solar and wind expected grow and supply ever more power to the grid. But without flexibility, such a future risks instability and insecurity. As our Energy Security study underscores, a triad of planning, flexibility and market reform will determine whether Europe thrives or stumbles.
The lesson is clear: just as spring’s renewal depends on a balance between sun and rain, warmth and chill, Europe’s energy system will require flexibility to harmonise abundance and scarcity. By empowering consumers, scaling storage and de-risking investments, we can secure a grid that’s resilient, affordable and clean. As Kristian Ruby aptly notes, “the energy transition is not just about electrons—it’s about people.” So, let’s ensure it works for all.
This blog post was originally published as part of Eurelectric’s LinkedIn Friday Features. Subscribe here to stay updated and never miss an edition.
Disclaimer: This article is for communication purposes only and may not reflect Eurelectric positions. Any positions taken in this article shall not be attributable to Eurelectric’s official positioning. Official Eurelectric positions are reflected only in position papers published here.