Decarbonisation slows in Europe due to less wind and hydro

A new report from Montel EnAppSys shows that despite record levels of solar power generation, decarbonisation is slowing across Europe. 

Compared to 2024, the report shows that the contribution of fossil fuels to total power generation increased to 27%, while renewables’ share dropped to 73%.

Q1 was especially low, with the lowest renewable generation since 2023.

This was mainly due to lower levels of wind and hydroelectric generation, with electricity generated from hydro falling 11% to 427.4TWh.

According to Montel EnAppSys, the year was marked by extremely low levels of rainfall, which left reservoirs depleted - the result of a single dry year or an indication of a downward trend caused by climate change.

In terms of solar, however, record high generation was observed in 2025, with 284.5TWh being recorded (13.5% higher than the total in 2024).

Jean-Paul Harreman, Director at Montel EnAppSys, comments: "Despite the record solar output, the overall decline in renewable generation was highlighted by particularly low output in the first quarter. 

“Fossil fuel generation trends were also somewhat mixed last year. Whilst we observed the lowest coal/lignite generation on record, this was offset by a rebound in gas generation, which rose compared to the levels seen in 2023 and 2024.”

Negative prices

All indications are that record solar generation will continue this year.

However, states Harreman: “Grid-scale producers are starting to see threats from ever-lower capture prices and more curtailment of wind output, due mainly to a lack of storage and negative prices.”

Last year saw more than 500 hours of below-zero prices seen in six European countries, a trend worsened by increased wind and solar capacity and a lack of demand-side response.

Worst hit was the SE2 Swedish price zone, which saw 679 hours in total. This was followed by the Netherlands, Germany, and Spain, with 584, 573, and 556 hours respectively.

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Added Harreman: “Consensus is divided on whether the rise in negative prices represents market dysfunction or simply an incentivising of flexibility via price signals. The main causes are intermittent renewables, which can create a surplus of electricity on especially sunny or windy days, and a lack of storage and flexibility from demand and must-run generation assets.”

This occurs mainly is summer and is experienced simultaneously across several parts of Europe, making the export of excess capacity challenging.

The report suggests that even more negative prices will be seen this year, as demand remains stable while renewables capacity continue to outgrow development of flexibility.

Besides continued growth in solar and weakness in hydro production, Montel EnAppSys also predicts that Dunkelflaute periods, which occur on cold days with little wind or sun, could cause extreme price spikes during the rest of this winter. 

Offshore wind in 2025

The report highlights what it refers to as “troubling signs in the development of further offshore wind projects”.

It cites the failure of a 2.5GW German offshore wind tender in the North Sea due to a lack of bids, as well as the impacts of project delays and supply chain disruption.

More specifically, roughly 60% of projects are facing delays or cancellations compared with the 2022 pipeline.

Also of interest: Negative power prices to increase as Europe's solar output rises to record high

However, it’s not all bad news. The report also highlights the successful conclusion of Poland’s first offshore wind auction, with a total of 3.4GW of wind set to be built in the Baltic Sea, and another 900MW set to be built off the coast of Ireland.

Also, with less-than-favourable policy conditions for offshore wind projects in the US, Europe could be seen as a “safe haven” for developers, yielding positive results for project development.