European renewables developers need to embrace volatility and change in the face of ongoing global shifts, according to speakers at the SolarPLUS Europe conference in Milan, Italy this morning.
On the opening panel of the conference, hosted by our publisher Solar Media (part of the Informa Group), industry experts discussed the role of solar and energy storage as “critical infrastructure” in the European market, as concerns over energy security and independence grow.
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Axel Thiemann, CEO of IPP Sonnedix, said that his firm has learned to “embrace volatility on all different levels,” including macroeconomic change, fast regulatory shifts and “really, really volatile” power prices. This volatility is “not necessarily something we need to mitigate and try to avoid, but it has to be a source of value. Not just a threat to how we run our business.”
The European energy industry has weathered a series of shocks over recent years, from the supply disruptions of the COVID-19 pandemic to skyrocketing energy prices and a massive solar expansion after the 2022 full-scale Ukraine invasion, to the most recent war in the Middle East and the impact it has had on wholesale power prices, in particular.
Amid this volatility, both Theimann and his fellow panellist, Alfonso Ortal, CEO of Verdian, emphasised the role of energy storage in Europe’s solar development market.
“We really believe that now the topic is storage, and the last two decades the topic was solar,” said Ortal. “Solar sells energy, storage sells reliability.”
Integrating energy storage both into solar assets and Europe’s wider power sector can help stabilise offtake agreements between energy asset owners and clients and mitigate the fact that Europe’s power grid is increasingly saturated with renewable energy capacity.
“Energy storage could be a modular, granular, decentralised extension of the grid…with the proper market incentives,” Ortal said.
‘Forecasts are useless’
The market has already shifted, with fewer opportunities for standalone solar assets than in previous years and a growing shift towards co-location and integrating batteries as lower prices and curtailment become more common.
The panel moderator, Lisa McDermott, managing director of project finance at ABN AMRO, asked the speakers what they had to “unlearn” as that shift has unfolded.
“Forecasts are useless,” Thiemann said. “It’s all about stochastic thinking.” In his view, long-term planning will naturally incorporate a range of scenarios and, as established, volatility is “the new normal”. He said it is necessary to take on various unexpected realities “as an offensive play”, and incorporate uncertainty into operations.
For Ortal, this situation is tied inexorably with energy storage technology and its inherent riskiness as an energy asset. “De-risking energy storage is good for scalability, for bringing debt, for providing certainty…but actually it’s shifting value to someone else.” In his view, to a trader, utility or system operator buying energy storage blocks.
“We will have got it wrong if we convert storage, which is an asset class designed to monetise volatility, into a toll road.”
