Germany recorded 459 negative-price hours in 2024 and 573 in 2025, setting new records each time. Through the first half of 2026, the pattern has shifted in a way that complicates straightforward narratives about the direction of price volatility: the frequency of negative hours has declined relative to 2025, but the depth of those negative prices has increased, and the occurrence of extremely high prices, most dramatically during the late-June heatwave, has grown. The result is a day-ahead market with wider daily spreads than at any point in the previous three years, driven by two opposing forces that are both accelerating simultaneously.
The spread data through 12 July 2026 confirms a step change from 2025 to 2026 in intraday price volatility, though the magnitude of that step is smaller than the jump observed between 2024 and 2025. The proximate drivers are identifiable: spring 2026 produced extreme negative price episodes as solar output hit new records in conditions of low demand, while the late-June heatwave pushed evening prices to levels that had not previously been recorded in the 15-minute market time unit data available since October 2025. Both events are consistent with a generation mix that is producing surplus at one end of the daily cycle and scarcity at the other, with insufficient flexibility between them to dampen the price signal.
The Solar Surplus and What Is Being Wasted
Installed solar PV capacity in Germany rose from 118 GW to 124.9 GW in the first half of 2026, with solar accounting for 18.2% of electricity generation, up 1.3 percentage points year on year. Solar curtailment approached 3 GWh in H1 2026, with 58.2% of the curtailed solar PV occurring during periods of negative day-ahead prices. The curtailment figure is small in absolute terms relative to total generation but large as a signal: it represents clean energy that was available but could not be absorbed because the system lacked the flexibility to shift it in time.
Germany cleared 123 of 720 hours below zero in April 2026 alone, with day-ahead generation forecasts and actual delivered output diverging most sharply on the same days that negative prices occurred. Forecast error is a structural contributor to negative prices because the day-ahead market clears based on generation forecasts rather than real-time output, and when actual solar generation exceeds the forecast, the surplus cannot always be redirected through intraday trading before physical delivery. The transition to 15-minute market time units on 1 October 2025 was designed partly to improve the granularity of price signals for intraday flexibility, but the forecast error problem operates at a level that time resolution alone cannot address.
Fraunhofer ISE noted a persistent storage gap that must be addressed to shift surplus electricity to hours of low generation, despite the fact that more large-scale battery storage systems were commissioned in H1 2026 than in all of 2025, bringing installed energy storage capacity from 25.4 GWh to 29.3 GWh by the end of June. The gap between the pace of solar installation and the pace of storage deployment is the core structural imbalance. Germany’s solar capacity has grown from 90 GW to 124.9 GW since 2022, while installed storage has grown from roughly 10 GWh to 29.3 GWh over the same period. The storage base is not growing proportionally to the solar base, and the result is a widening mismatch between midday generation surplus and evening demand that no amount of additional solar capacity can resolve without a corresponding growth in dispatchable storage.
Regulatory Adjustments and Their Limits
Germany’s Solar Peak Act of February 2025 set the market premium for EEG-subsidised plants commissioned after the cut-off date to zero from the first negative-price hour onwards, bringing forward the originally planned gradual reduction from the two-hour threshold planned for 2026 and the one-hour threshold planned for 2027. The intent is to remove the financial incentive for subsidised solar plants to continue generating and bidding into the market at negative prices, which keeps them in the merit order even when the system cannot absorb their output.
The practical effect is constrained by two factors. First, the regulation does not apply to plants with a fixed feed-in tariff, which covers a large portion of the installed base built under earlier EEG regimes. Those plants have no market premium to lose and continue to generate regardless of the day-ahead price signal. Second, residential solar installations without smart meters continue to bid at negative prices because they have no real-time price visibility and no mechanism to respond to price signals at the timescale relevant to the day-ahead market. The German Association of New Energy Economy has called for accelerated rollout of smart meters to allow consumers to shift demand to periods of low or negative prices, alongside removal of barriers to grid connection for large-scale battery storage systems.
The Two-Sided Volatility Problem
The market dynamic in 2026 is not simply about too much solar. It is about a generation mix that produces extreme conditions at both ends of the price distribution simultaneously. The same solar build that drives deeply negative midday prices in spring is providing less than 10% of its rated capacity by 7 pm, precisely when air conditioning loads from a heatwave are still running, and conventional plant output is reduced by thermal efficiency penalties and water temperature constraints.
The June 2026 heatwave illustrated the full extent of this two-sided problem. Daily spreads during the heatwave week reached their highest levels of the year, driven not by negative prices but by evening price spikes. The week of 22 to 28 June 2026 produced the lowest wind generation of the year in Germany, compounding the solar fade effect with a simultaneous reduction in the most available non-dispatchable clean generation. The result was a merit order that at evening peak relied almost entirely on gas peakers operating at reduced efficiency and imports from neighbouring systems experiencing the same conditions.
The structural implication is that Germany’s day-ahead price volatility is becoming endogenous to the generation mix rather than a temporary transitional feature. As solar’s share of generation rises and the installed base of inflexible residential solar without price responsiveness expands, the frequency and depth of negative midday prices will continue to increase unless storage deployment accelerates at a rate well above current trajectories. At the same time, as the coal and nuclear fleet retires, the evening hours will increasingly rely on a generation stack that shrinks faster than demand-side flexibility and battery storage can expand to cover the gap. The spread between negative daytime prices and high evening prices in 2026 is the price system communicating the value of the investments and regulatory changes that would resolve it.
