A recent study on the European electricity market from energy data analyst Montel Analytics has highlighted a growing trend of negative prices across Europe, with Sweden’s SE2 price zone recording over 500 hours in the six months to the end of June. This was driven by unusually strong hydro inflows, transmission bottlenecks, changes to flow-based market coupling and the continued increase in renewable capacity.

Montel’s research also shows:

• The number of negative hours exceeded 300 in Spain (459), the Netherlands (408), Germany (389), France (363), Belgium (361), Finland (363), and Denmark (326).
• Almost all European countries are seeing an increased number of such hours this year, with the trend likely to continue into the future.

The trend of below-zero prices was driven primarily by rising levels of solar generation, which hit a record high in the three months to June. Total solar output for Q2 was 104.4 TWh, with Germany (29.0 TWh), Spain (15.8 TWh) and France (9.9 TWh) the biggest contributors.

The largest increases versus Q2 2024 were observed in Germany (4.9 TWh, up 20%) and the UK (2.1 TWh, up 40%), with France, Switzerland, Romania and Belgium seeing growth rates of 30% or more.

While solar output was high, coal/lignite reduced to a record quarterly low of 52.5 TWh, an 11% drop on Q2 2024. The biggest contributor to the decline was Poland, which saw a 22% and 16% drop in coal and lignite generation respectively versus Q2 2024, while Italy, Spain, Romania and Hungary also saw large falls in relative generation.

Jean-Paul Harreman, Director at Montel Analytics commented: ““Central and Western Europe are expected to see the widest spreads between midday solar output and evening demand peaks. Germany, the Netherlands and Belgium are likely to continue experiencing sharply negative prices in the afternoon, followed by high prices in the evening as fossil fuel capacity ramps up. A similar pattern is emerging in parts of southeastern Europe. However, limitations in grid infrastructure and cross-border interconnection capacity are expected to reduce this region’s ability to benefit from lower prices in neighbouring markets.”

The report also highlighted regional stress points that were impacting hydro and thermal generation, with central, southern and southeastern Europe currently experiencing lower reservoir levels compared to the same period in 2024. If above average summer temperatures persist, this could elevate the risk of supply tightness, both in terms of hydro generation capacity and river navigability. Low reservoir levels may also translate into lower river flows, which would affect levels of thermal generation.

Geopolitical developments are expected to remain a dominant force in European power markets, with the ongoing conflict in Ukraine, instability in parts of the Middle East and evolving energy policy positions in the US contributing to continued volatility in global LNG and gas markets.

In turn, these factors are likely to place further upward pressure on European wholesale gas and electricity prices as countries take additional steps to secure gas inventories ahead of the 2025-2026 winter season.

Harreman added: “For industrial buyers and large consumers, this quarter may be marked by significant price volatility. The simultaneous occurrence of extremely low and extremely high intraday prices, driven by solar output patterns, nuclear constraints and infrastructure limitations, presents both operational challenges and procurement risks. Energy Intensive Industries are advised to monitor market developments closely and evaluate exposure to peak pricing events, particularly during late afternoon and early evening.”

Q3 2025 is also expected to be characterised by ongoing constraints in relation to the French nuclear fleet. Corrosion-related outages remain a factor, with output management expected to involve ongoing modulation around demand and renewable supply.

One critical variable is water temperature. Restrictions on cooling water use, triggered by elevated river temperatures, may constrain nuclear output, particularly during peak afternoon heat. Knock-on effects may be seen in the early evening ramp, where neighbouring countries reliant on French exports may be forced to activate more expensive domestic thermal generation as solar output declines.