The European Solar Divide: Where PV Investors Can Still Find Returns in 2026

Dec. 25

Written by the Logic Energy Editorial Team

SolarPower Europe expects EU solar capacity additions to decline again for the first time in 2026. Spain added its largest capacity in 2025, at 13.4 gigawatts—with the lowest revenue per kilowatt-hour among the markets surveyed. What this means for the selection of countries.

The short answer

In 2026, the European solar divide will not be based on revenue but on new installations. According to SolarPower Europe, Spain added 13.4 gigawatts in 2025, with the lowest capture prices among the markets surveyed; Italy achieved the highest monthly revenue among the markets tracked by Modo Energy but lost market share. Capital demonstrably does not follow revenue per kilowatt-hour; it follows grid connection and permitting.

1. The European Solar Market in 2026: The Decline Will Come Later Than Expected

According to the latest report from SolarPower Europe, new installations in the EU totaled 69.6 gigawatts in 2025. For 2026, the association expects 68.1 gigawatts, with a forecast range of 62 to 74.1 gigawatts—a decline of 2.1 percent. The first half of 2026 saw 33.8 gigawatts of new solar capacity installed. The decline thus begins in 2026, not 2025.

How SolarPower Europe's assessment in September 2026 differs from that in December 2025

The perception of the European solar market has shifted within nine months, even though nothing has changed in the market itself.

Publication Status	Expansion 2025	Key Findings of the Report
EU Solar Market Outlook, December 11, 2025	65.1 GW	first year-over-year decline since 2016
EU Solar Market Mid-Year Update, September 8, 2026	69.6 GW	2025 as a record year, decline beginning in 2026

The difference of 4.5 gigawatts is almost entirely attributable to a single country. SolarPower Europe has revised its forecast for Spain’s installed capacity in 2025 upward from 9.2 to 13.4 gigawatts; 4.2 of the 4.5 gigawatts come from Spain. The rest of the continent remains virtually unchanged.

For you as an investor, two things are important here. First, a market figure is not a constant but a snapshot in time. Anyone who bases an investment decision on a growth rate is basing it on a figure with a documented tendency to be revised. Second, and this is the real finding: the record year occurred in the market with the weakest revenues in Europe.

Where the new PV capacity has gone

The segment shift is the more stable part of the picture. It is taken from the “EU Solar Market Outlook 2025–2030” published in December 2025 and is therefore based on the older version of the installation forecast; this does not change the overall trend.

Segment	2023	2024	2025
Solar Farms (Utility-Scale)	35 percent	44 percent	53 percent
Commerce and Industry	37 percent	36 percent	32 percent
Roof-mounted systems on residential buildings	28 percent	19 percent	14 percent

Due to rounding, the figure in column 2025 comes out to 99 percent. For the first time, solar farms account for more than half of Europe’s new capacity, while the share of rooftop systems on residential buildings has halved within two years. The growing market is the same sector in which professional investors are active.

The ranking of member states has also shifted. France displaced Italy from third place in 2025: 6.7 versus 5.2 gigawatts. Five of the ten largest EU markets will have installed less capacity in 2025 than in 2024: Italy, the Netherlands, Poland, Portugal, and Greece. Romania and Bulgaria are in the top 10 for the first time. Thus, while some member states continue to grow, the established markets are declining.

The Role of Solar Power Systems in the European Electricity Grid Today

In 2025, solar power systems in the EU generated 369 terawatt-hours of solar energy, accounting for 13 percent of electricity generation—a 20 percent increase compared to 2024. Coal accounted for 9.2 percent that same year, the lowest figure ever recorded. In June 2026, solar energy—at 25 percent and 52 terawatt-hours—became the largest single source in the EU’s electricity mix for the first time, ahead of nuclear power at 21 percent and natural gas at 15 percent. This marks a turning point for the European energy transition.

These figures also explain the revenue problem. The more PV systems feed power into the grid during the same midday hours, the lower the price drops during precisely those hours. The market is growing into a metric described in the next section.

Who Benefits from This Market, and Who Doesn't

Total European capacity continues to grow, albeit at a slower pace. For investors with an investment horizon of more than ten years who are willing to assess grid connection and permitting risks, the European solar market remains viable. For investors who rely on market growth as a driver of returns, however, this is no longer the case: new installations are declining, and revenue per kilowatt-hour is under pressure. The policy target for 2030 is 750 gigawatts, while the projection stands at 718 gigawatts.

2. Revenue per kilowatt-hour: the metric that divides the market

Capture Price is the revenue that a solar power plant actually generates based on the market average, in euros per megawatt-hour. Capture Rate compares this revenue to the average price across all hours. Both metrics are calculated by research firms, not collected by government agencies. There are no official revenue statistics for solar energy.

What These Metrics Measure—and What They Don't

The difference is significant in practical terms. A capture price of 150 euros per megawatt-hour in a high-price market is different from the same figure in a low-price market. Conversely, a capture rate says nothing about the absolute amount of revenue.

Three limitations of this metric should be considered in any calculation. First, it measures revenue per kilowatt-hour generated; curtailed kilowatt-hours are not included. Second, it is a market average, not a plant-specific figure. Third, it is a metric per megawatt-hour, whereas your return depends on a metric per kilowatt-peak. None of the sources we reviewed correlate the capture price with the specific annual yield per country, and we expressly do not do so here either.

The European Series in September 2026

Modo Energy publishes monthly "Capture Prices" for European markets, making it possible to compare trends over time. Here are two snapshots from the year 2026:

Market	Capture Price March 2026	Capture Price August 2026
Italy	124.72 euros per megawatt-hour	150.17 euros per megawatt-hour
Spain	ten times lower than in Italy	53.19 euros per megawatt-hour

According to Modo Energy, the August figure for Italy represents the highest monthly revenue for any European solar market in two years. In the same month, the Spanish market was the only one among those tracked where solar power generated less revenue than a year earlier.

In March, according to Modo Energy, the Spanish capture price was ten times lower than the Italian one; in August, the gap was still about three times as large—based on our own calculation of 150.17 versus 53.19 euros. Both figures represent individual months, and the choice of month determines the result: March marks the beginning of the cannibalization season there, while August marks its end. No trend can be inferred from this, in either direction. Modo Energy itself attributes the Italian increase to lower solar generation and higher gas prices.

For Europe as a whole, Kpler reports an average capture rate of 38 percent for May 2026, seven percentage points below the previous year’s figure and the lowest level ever recorded. France set the European low at 9.5 percent in April 2026; by June of that same year, France had rebounded to 63 percent amid a heat wave. Germany recorded a rate of 25 percent in April 2026.

Why Italy is in the lead: it's the price of gas

Italy tops the European rankings for annual capture rates at 86 percent, measured as a rolling annual average as of March 2026. Modo Energy explains the reason in the same article: In Italy, gas-fired power plants often set the marginal price even during peak solar hours. This protects solar power plants from cannibalization.

An independent analysis of ENTSO-E hourly data for June through August 2026 puts the figure at 133.4 euros per megawatt-hour and 85.3 percent—2.3 percentage points lower than in the same period last year. This figure does not confirm the 86 percent figure: it measures a summer quarter, while the 86 percent figure measures a rolling year. The two values are not interchangeable.

The same analysis quantifies the gas figures. In the summer of 2026, gas covered about 80 percent of Italy’s generation shortfall of 7.9 terawatt-hours; gas’s share of Italy’s generation rose from 40.6 to 47.7 percent.

This leads to a conclusion that you won’t find in any sales brochure: Anyone who buys an Italian solar power system because of its higher returns is essentially taking a long position on European gas prices. The system operates for 25 years, but the gas price does not.

3. Spain: Record growth amid Europe's weakest revenues

According to a survey by SolarPower Europe, Spain recorded the largest solar capacity addition in its history in 2025, at 13.4 gigawatts, while also posting the lowest capture prices among the European markets surveyed. Both of these facts hold true at the same time. That is why revenue quality alone is not a selection criterion for a solar power plant, neither in Spain nor elsewhere.

Three Numbers for an Expansion

There are three figures circulating regarding the 2025 expansion in Spain, all of which are correct and measure different things.

Survey	Value 2025	Delimitation
Red Eléctrica de España	8,821 megawatts	excluding self-consumption systems
Red Eléctrica de España	over 10,400 megawatts	with self-consumption systems
SolarPower Europe	13.4 gigawatts	Separate classification, basis for the EU revision

Anyone who compares these figures creates a contradiction that does not exist. Anyone who cites one of them without specifying which creates a statement that cannot be verified. Installed solar capacity stood at approximately 41 gigawatts without self-consumption systems and approximately 50 gigawatts with them at the end of 2025.

On the generation side, the picture is clear: 50,188 gigawatt-hours of solar energy in 2025, representing 18.4 percent of Spain’s electricity generation excluding self-consumption and 21.3 percent including it. From January through July 2026, 34,665 gigawatt-hours were added to the mainland grid, excluding self-consumption, representing an increase of 22.8 percent. In July and August 2026, photovoltaics accounted for 29.6 percent and 29.2 percent, respectively, making it the largest single source in the mainland grid’s generation mix for the fifth consecutive month.

What Happens During the Lunch Break

The annual average wholesale price in Spain in 2025 was 65.28 euros per megawatt-hour. The monthly data series for 2026 shows where the problem lies:

Month 2026	Average Daily Market Value
January	71.67 euros per megawatt-hour
March	54.23 euros per megawatt-hour
April	42.44 euros per megawatt-hour
May	41.71 euros per megawatt-hour
June	69.59 euros per megawatt-hour
July	104.75 euros per megawatt-hour

April and May are the months with the lowest wholesale prices in the series. The lowest price was minus 15 euros per megawatt-hour in 2025, and minus 10 euros in both June and July 2026.

There is no reliable count of negative price periods from an official source. Neither OMIE, nor the grid operator, nor the regulatory authority maintains such a series. In addition, there is a break in the counting rules: Since October 1, 2025, the Spanish day-ahead market has been trading in quarter-hour intervals instead of hours, meaning 96 periods per day instead of 24. Any comparison between 2025 and 2026 mixes two different counting rules.

What can be substantiated is the trend. Modo Energy notes that the country had already exceeded the annual total of negative hours for 2025 as early as May 22, 2026, and was 242 hours over that total by the end of August, with four months remaining. For the first quarter of 2026, an analysis of ENTSO-E data shows 347 negative bidding zone hours for Spain and zero for Italy. The previous year’s figure of 73 hours, also cited there, comes from the same analysis but straddles the change in the counting rule that took effect on October 1, 2025—we therefore do not include it in the comparison.

On the revenue side, there is curtailment. The Spanish grid operator reported 1,111.6 gigawatt-hours of non-integratable renewable energy for June 2026 and 810.9 gigawatt-hours for August. These kilowatt-hours do not appear in any capture rate statistics because they were never generated.

Network access now costs money

Anyone planning a solar farm there should be aware of March 20, 2026. On that date, the government adopted Real Decreto-ley 7/2026, which was published in the Official Gazette on March 21, took effect on March 22, and was ratified by the Chamber of Deputies on March 26. Article 11 introduces a fee for reserving grid access capacity.

It becomes due as soon as the grid connection permit is issued and remains in effect until commissioning. The amount is based on the regulatory authority’s capacity fees and may be tiered according to voltage level and delay. For project developers, this means that a reserved but unbuilt grid connection is no longer a free option. For investors, this means that the time between approval and commissioning must be factored into their calculations.

The bottleneck that this regulation addresses is significant. Of the 937 nodes in the Spanish transmission grid, only 42 still had available interconnection capacity as of April 27, 2026.

Article 9 of the same decree expands the scope of collective self-consumption: The permitted distance between generation and consumption increases to five kilometers, and the role of self-consumption administrator is established.

The demand side could turn things around around noon

In August 2026, the Ministry of the Environment in Madrid submitted a draft regulation for public comment that would require data centers with a connected load of one megawatt or more to cover at least 80 percent of their consumption each hour with renewable electricity generated during that same hour. According to the draft text, only electricity generated by facilities commissioned no more than 18 months prior to the data center’s commissioning would be eligible. The requirement is set to end once the national share of renewable energy exceeds 90 percent.

According to the ministry, the public hearing ran through September 10, 2026. The draft has not yet been published in the Official Gazette and is therefore not yet law. If it is adopted in this form, it would be the most plausible mechanism for meeting demand precisely during the midday hours when the Spanish capture price collapses: hourly matching cannot be achieved using off-peak electricity.

What This Means for Solar Farm Investments

The self-consumption market reveals where margins still lie. According to a survey by the industry association UNEF, new self-consumption capacity installations declined to 1,139 megawatts in 2025, a decrease of 3.7 percent. The only growing segment was industry, with 679 megawatts, an increase of 0.7 percent; the commercial sector declined by 15 percent, and residential rooftop systems by 17 percent. This is an association survey, not an official statistic; the grid operator reports 8,856 megawatts of self-consumption photovoltaic capacity for the end of 2025, while UNEF reports 9.3 gigawatts.

We do not specify a self-consumption rate as a percentage here. There is no primary source for this, neither in Spain nor in Germany; commonly cited ranges of 60 to 80 percent are unsubstantiated.

4. Italy: highest recorded monthly revenue, fourth place in terms of new capacity

In 2025, Italy installed 5.2 gigawatts, down from 6.1 gigawatts in 2024, dropping to fourth place behind France. In the first half of 2026, 3,093 megawatts were added, bringing the total installed capacity to 46.6 gigawatts by the end of June. At the same time, Italian solar power generates the highest revenue per kilowatt-hour among the European markets tracked by Modo Energy.

The national figure masks the areas where construction is taking place

Ground-mounted solar farms are being built in southern Italy and on the islands, but not in the Po Valley. The location therefore determines the revenue. It is precisely there that revenue quality is significantly below the national average.

Market Zone	Capture Rate, May 2026	Capture Price June through August 2026	Capture Rate, June through August 2026
Sardinia	58 percent	123.7 euros per megawatt-hour	not reported
Sicily	59 percent	132.5 euros per megawatt-hour	80.9 percent
Southern Italy and Calabria	60 percent	131.3 euros per megawatt-hour	not reported

The two columns do not contradict each other; they measure different time periods: a spring month and a summer quarter. The range within Italy is therefore considerable. According to an analysis by the ITALIA SOLARE association, in Calabria, southern Italy, and Sicily, 215 hours in the second quarter of 2026 were priced below 20 euros per megawatt-hour, all between 10 a.m. and 6 p.m.

An annual figure for Italy is therefore not a suitable criterion for investment. The question is not what Italy generates, but what the area where your project is located generates.

Why the profit margin shouldn't be included in every calculation

Three factors are limiting Italy's lead.

First, it's a gas price, not a locational advantage. The reasoning is explained in the previous section.

Second, a subsidy offsets it. The FER X subsidy mechanism is a two-way difference contract with a 20-year term. If the market price exceeds the award price, the operator repays the difference. For FER-X-subsidized systems, the revenue advantage is thus contractually neutralized; it applies only to systems without subsidies or with a power purchase agreement. Details on the mechanics, prices, and deadlines can be found in our article on PV investment in Italy.

Third, construction is often not permitted in areas where revenue is highest. Modo Energy notes that in Italy, approximately 140 gigawatts are in the grid connection queue, while the Decreto Agricoltura of May 2024 prohibits ground-mounted installations on agricultural land and blocks the permitting process. The high quality of returns is partly a result of this blockage: where there is little new construction, prices erode more slowly.

We have a separate page dedicated to Italian subsidies, the capacity market for storage, and the tax treatment of German investors; the market analysis of the Italian solar market is also available separately.

The "Decreto Bollette" and Article 9

The relief mechanism for gas network fees under Article 9 of the Decreto Bollette does not specify a euro amount in the text of the law. The frequently cited figure of approximately 409 million euros is a government estimate from the technical justification; according to the regulatory authority, the actual amount will not be determined until the end of September 2026. We will address what the decree means for investors in a separate section.

5. Germany: 128 gigawatts-peak and a revenue model in transition

With 17.6 gigawatts of new installations in 2025, Germany remains Europe’s largest solar market. Installed PV capacity exceeded the 128 gigawatt-peak mark in August 2026; the German Solar Industry Association (BSW-Solar) therefore considers the EEG expansion target for 2026 to have been met. At the same time, revenue trends are shifting more dramatically than in any other market considered here.

Why a percentage without a reference value means nothing

There are five sets of data for Germany's solar energy share in 2025, all of which are correct and measure different things.

Value	Reference value	Source and Status
16.0 percent	Domestic Grid Feed-in	Federal Statistical Office, March 6, 2026
16.9 percent	Net electricity generation	Federal Network Agency, Fiscal Year 2025
18 percent	domestic electricity generation	German Solar Industry Association, January 5, 2026
19 percent	Total German net electricity generation	German Solar Industry Association, June 23, 2026
about one-fifth	German net electricity generation	German Solar Industry Association, August 20, 2026

The series cannot be converted into one another. Combining the January figure with the June reference value results in a statement that is not supported by any source. The same applies to 2026: The 18.2 percent share in the first half of the year refers to the load—that is, grid consumption plus grid losses, excluding pumped-storage power, power plant self-consumption, and solar self-consumption. It would be incorrect to cite this as a share of net electricity generation.

According to an analysis by Fraunhofer ISE, German grid feed-in reached 43.2 terawatt-hours in the first half of 2026, compared with 39.3 terawatt-hours in the same period of the previous year. ISE continues to update this data series on an ongoing basis via the energy-charts portal.

The Solar Market in 2026

In Spain, there is no official equivalent to the capture price. Germany has one: the market value for solar power under Annex 1 to Section 23a of the EEG. Transmission system operators publish it monthly.

Month 2026	Market Value of Solar
January	11.019 cents per kilowatt-hour
April	1.317 cents per kilowatt-hour
July	5.226 cents per kilowatt-hour
August	6.359 cents per kilowatt-hour

April 2026 marks a five-year low. The range from January to April is a factor of eight. Anyone who compares a twenty-year investment to a single monthly figure is comparing the hedge to the risk it is intended to protect against.

The August figure is based on three consistent expert sources; the table on the transmission system operator portal is generated dynamically and was not machine-readable at the time of publication.

What is noteworthy is the opposite trend: According to Modo Energy, Germany is the only market among those surveyed to show a sustained improvement in its annual capture rate, from 50.7 to 57.5 percent as of August 2026. Modo cites two drivers: stricter feed-in rules for hours with negative prices and stronger summer demand. Only the first of these is mandated by regulation and is therefore sustainable.

In August 2026, the German day-ahead market recorded 226 negative quarter-hours, all of which occurred between 9:30 a.m. and 4:45 p.m. From January through August, there were 1,710 quarter-hours, which corresponds to 427.5 hours or about seven percent of all intervals.

EEG 2027: Status of the proceedings as of September 10, 2026

The amendment to the Renewable Energy Act is a bill, not a law in force. The current status:

Cabinet decision on July 29, 2026.
Submitted to the Bundesrat on August 14, 2026, as a matter of particular urgency pursuant to Article 76, paragraph 2, sentence 4 of the Basic Law, as Bundesrat Document No. 470/26 for the EEG and No. 471/26 for the grid connection package.
Bundestag Document No. 21/7867, dated September 7, 2026, 275 pages, expressly designated as a preliminary version.
The committee deliberations in the Bundesrat began on September 10, 2026, in the Economic Committee under agenda items 23 and 24. No committee recommendation was issued on that day.
On September 24, 2026, the Bundestag debated the bill in its first reading and referred it to the Committee on Economic Affairs and Energy.
On September 25, 2026, the Federal Council issued its opinion in the first round.
The planned effective date is January 1, 2027.

Two misclassifications are common in the current legislation. First: The five-percent curtailment threshold, the time limit of up to six years, and the waiver of compensation of 20 percent and 18 percent, respectively, belong in the grid connection package, not in the EEG. Second: A transitional cent rate for the EEG 2027 is cited in the press with varying figures; there is no reliable source for this, so we do not provide a specific figure.

To put the revenue side into perspective: The average winning bid price for the open-field tender held on July 1, 2026, was 4.79 cents per kilowatt-hour. The price range for generic 10-year photovoltaic power purchase agreements in the calculation month of August 2026 was 28 to 40 euros per megawatt-hour—or 2.8 to 4.0 cents per kilowatt-hour—and thus entirely below the award price.

6. Austria: What Happens If Subsidy Policy Changes?

Austria is the smallest of the four markets and, at the same time, the most instructive, because over the course of eighteen months it was possible to observe the effect a single tax measure has on a market.

The change was a tax-related one, not a technical one

As of January 1, 2024, a zero value-added tax rate applied in Austria to photovoltaic systems with a peak capacity of up to 35 kilowatts. The Budget Consolidation Measures Act of 2025, passed by the National Council on March 7, 2025, and promulgated on March 18, 2025, replaced the date “January 1, 2026” with “April 1, 2025” in the text of the law. Since then, the standard tax rate of 20 percent has applied.

A transitional provision that is often overlooked: For contracts entered into before March 7, 2025, the zero tax rate remained applicable through December 31, 2025. Anyone valuing an existing system from 2025 must therefore know the contract date to determine whether the tax rate applied was zero or twenty percent.

At the same time, new capacity additions declined significantly. The Austrian regulatory authority E-Control annually surveys the newly connected congestion capacity among 60 grid operators, 58 of which submitted data; the respondents cover 98 percent of the metering points. For 2025, the survey shows approximately 1.6 gigawatts of new solar capacity, compared to about 2.5 gigawatts in the record year of 2023 on the same basis. The available surveys do not allow for a quantitative determination of a causal relationship between the tax change and the decline; the two data series occur simultaneously. Cumulative peak capacity still grew by about 20 percent in 2025; the industry association PV&B Austria estimates the total peak capacity at the end of 2025 to be about 9.8 gigawatts.

A preliminary note on this: Austria maintains two separate sets of capacity figures. E-Control tracks congestion capacity, while the Ministry of Economic Affairs tracks peak module capacity in direct current. The difference amounts to just over one gigawatt. Both sets of figures are consistent within themselves, but not with each other.

The ElWG has been in effect since December 2025

The Austrian Electricity Industry Act is still often referred to as a draft. That is no longer accurate: It was enacted as Article 1 of the Affordable Electricity Act and published in the Federal Law Gazette on December 23, 2025. The National Council passed it with a constitutional majority, and the Federal Council raised no objection on December 17, 2025.

Two provisions directly affect feed-in providers; both take effect on January 1, 2027.

Section 75a introduces an annual grid infrastructure fee for feed-in providers. The amount is set by regulation, with a maximum of 0.05 cents per kilowatt-hour fed into the grid; feed-in providers with a grid-connected capacity of up to 20 kilowatts are exempt. The regulation has not yet been issued. In terms of amount, the contribution is manageable: 0.05 cents per kilowatt-hour corresponds to 0.50 euros per megawatt-hour, which—based on the German market value of solar power in August 2026—represents approximately 0.8 percent of revenue. What is significant is not the amount itself, but the precedent set by a separate levy on grid feed-in.

Section 101 governs peak power capping. For photovoltaic systems, the cap must not reduce the power fed into the grid to less than 70 percent of the module’s peak power. Two restrictions are crucial for investors: The regulation applies only to new installations or expansions—existing systems are unaffected—and a dynamic variant will take effect starting in 2028. The one-percent limit mentioned in the same standard refers to wind power, not photovoltaics.

A second package followed in the summer: The Renewable Energy Expansion Acceleration Act was promulgated on July 1, 2026. It raises the target for 2030 to 30 terawatt-hours, sets a minimum of 40 terawatt-hours for 2035, and, for the first time, establishes a target of 5 gigawatts of battery storage by 2030. In addition, it introduces a one-stop shop for permitting procedures and a penalty mechanism for states that fail to meet their targets.

Where the Funding Goes: Fewer Grant Programs

In 2026, the subsidy programs for investment grants will be more limited and more focused on energy storage. The regulation dated January 16, 2026, sets rates for photovoltaics ranging from 150 euros per kilowatt-peak in the smallest category to a maximum of 120 euros in the largest; energy storage systems receive 150 euros per kilowatt-hour across all categories.

The high demand shows just how limited the funds are. The first funding call in April 2026 had already drawn nearly 29,000 applications right from the start. In the second call, approximately 20 million euros were available—12 million in regular funding and 8 million in remaining funds; approximately 28,000 applications were received, about 3,000 were approved, and about 25,000 were not considered. The third call for proposals runs from October 8 to 22, 2026, with 8 million euros in funding.

On the market premium page, the maximum rate for photovoltaics is set at 7.77 cents per kilowatt-hour for all bidding rounds in 2026 and 2027. By comparison, in 2024 it was 8.98 cents, and the volume put out to bid was 1,628,690 kilowatt-peak, compared to 700,000 kilowatt-peak in 2026. The next bidding date is September 24, 2026.

Another amendment to the Renewable Energy Expansion Act has been announced, focusing on storage, system services, and market integration, as well as a reduction in the statutory subsidy rate from up to 30 percent to a maximum of 20 percent. A draft for public comment has not yet been released; this is a policy announcement, not law.

7. What all four markets have in common: the grid connection

Grid connection is the only bottleneck that simultaneously constrains all four markets, and it is the one that appears least frequently in return-on-investment calculations. In April 2026, the analytics organization Ember compiled data based on reports from European grid operators themselves. In the eight EU countries that submitted reports, approximately 700 gigawatts of renewable capacity is in the connection queue.

In eleven countries, over 340 gigawatts have already been approved for connection but are not yet connected to the grid. Across more than 20 reporting countries, there is a 120-gigawatt gap between expansion plans and available grid capacity by 2030, of which 104 gigawatts are at the transmission level. Eight countries, including Austria, the Netherlands, Poland, and Portugal, have less than 10 percent of the grid capacity required by their own 2030 plans.

Each of these figures refers to the respective reporting countries, not to the EU as a whole—the surveys do not allow for an extrapolation to the EU-27.

The consequences are evident in national surveys. In Spain, as of April 2026, only 42 of 937 transmission grid nodes still had available capacity, and since March, reserving a connection has cost money. In Italy, approximately 140 gigawatts are on the waiting list, while approvals for open-space installations on agricultural land have been blocked. In Germany, the volume of grid congestion management measures in 2025 totaled 30,319 gigawatt-hours and cost 3,071 million euros; 9,379 gigawatt-hours of renewable generation were curtailed—3.5 percent of the total—including 2,704 gigawatt-hours from photovoltaics, a 94 percent increase compared to 2024. This figure represents total feed-in management; a narrower count, which captures only price-driven curtailment, is significantly lower.

Curtailed kilowatt-hours are the blind spot in any revenue metric. A capture price measures the revenue generated by one kilowatt-hour of electricity. Electricity that was not allowed to be generated does not appear in this figure. Greece illustrates just how large this gap can become: According to an analysis by Professor Pantelis Biskas, approximately two terawatt-hours were curtailed there in 2025—7.5 percent of renewable generation; for 2026, he expects 3.3 to 3.7 terawatt-hours, or about 12 percent.

Things are moving at the European level, but slowly. Regarding the European Grids Package, the Council reached a general approach on June 26, 2026; the trilogue with the Parliament is still pending. It is not yet law.

The counterforce is growing faster than the regulatory framework. In 2025, Europe added approximately 36 gigawatt-hours of battery storage, an increase of 48 percent; total capacity exceeded 100 gigawatt-hours for the first time. Large-scale storage accounted for more than half of the new capacity; SolarPower Europe expects this figure to reach three-quarters by 2030. The three largest markets were Germany, the United Kingdom, and Italy; Ukraine and Bulgaria are new entrants in the top 5.

8. Three Investment Theses for 2026

Three propositions emerge from the four market scenarios. Each specifies the condition under which it applies and the factor that causes it to fail.

Thesis 1: Revenue per kilowatt-hour is an evaluation criterion, not a selection criterion

According to a survey by SolarPower Europe, Spain added 13.4 gigawatts of capacity in 2025—the largest increase in its history—and had a capture rate of nine percent in February 2026. Italy achieved the highest monthly revenue among the markets tracked by Modo Energy but ranked fourth in terms of new capacity additions. This clearly shows that capital did not follow revenue per kilowatt-hour.

This is not a contradiction, but rather a statement about the order of priority of the criteria: First, it is determined whether a project may be built and connected to the grid; then, what revenue it generates. A high capture price in a market with no available interconnection capacity is not an investment opportunity.

This argument falls apart when grid connection and permits become widely available in a market. At that point, revenue takes a back seat.

Thesis 2: Buying into Italy means buying into gas prices

Italy’s revenue advantage stems from the fact that gas-fired power plants there set the marginal price more often than elsewhere, even during peak solar hours. In the summer of 2026, gas covered about 80 percent of Italy’s generation gap, with the share of gas rising from 40.6 to 47.7 percent.

Anyone who carries this lead forward into a twenty-year projection is assuming that gas will continue to set the price for the next twenty years. Modo Energy itself forecasts that solar capacity in Italy will rise from 50 gigawatts in 2026 to 111 gigawatts by 2040, while the gas-fired power plant fleet will decline only from 44 to 31 gigawatts, and states: With each year of new solar capacity, the summer midday price falls further below the daily average.

This argument falls apart if your Italian plant receives subsidies through FER X. In that case, the advantage is offset by the two-way spread contract, and only the premium price remains.

Thesis 3: Germany is the only market among those surveyed where revenue quality is improving

According to Modo Energy, Germany’s annual capture rate has risen from 50.7 to 57.5 percent. Modo cites two factors driving this increase: stricter rules for generation during hours with negative prices and stronger summer demand; only the first of these is a given. For existing plants eligible for the statutory market premium, this represents an improvement in realized revenue.

At the same time, the legal basis for this market premium is currently undergoing amendment. On September 25, 2026, the Bundesrat issued its opinion on the first reading of the EEG amendment; it is scheduled to take effect on January 1, 2027, but this has not yet been finalized. Anyone commissioning a German power plant in 2026 will be doing so under a framework that is in the process of being replaced through the legislative process.

This argument falls apart if the amendment also changes the market premium framework for existing facilities. Based on the status of the proceedings examined here, it remains unclear what the draft proposes for existing facilities.

9. Six Risks Every Investor Should Know About

Risk 1: Regulatory changes are happening faster than the project timeline

In all four markets, the regulatory framework has changed significantly within eighteen months: Austria has eliminated the zero VAT rate and enacted a new Electricity Industry Act; Spain has introduced a fee for reserved grid connection capacity; Germany is negotiating the amendment to the Renewable Energy Sources Act (EEG); and Italy has revamped the FER X support mechanism. A power plant has a lifespan of 20 to 25 years. None of the four regulatory frameworks has remained unchanged during this period.

Risk 2: Grid Connection and Power Curtailment

See Section 7. Key to the calculation: Output curtailment reduces output without affecting the revenue metric. A project with a high capture price and a 10 percent output curtailment generates less revenue than one with a lower capture price and no output curtailment.

Risk 3: Revenue Risk During Lunchtime

In all four markets, the hours with the highest solar feed-in are the hours with the lowest prices. In Germany, all 226 negative quarter-hours in August 2026 occurred between 9:30 a.m. and 4:45 p.m. In the Spanish market, the number of negative hours in 2026 had already exceeded the previous year’s total by May. Storage systems shift energy out of these hours. Capacity is growing—Europe added about 36 gigawatt-hours in 2025, with Italy ranking third—but it does not yet cover the midday hours.

Risk 4: The capture price is rarely the proceeds you actually receive

Those who hedge give up the capture price. The German auction price in July 2026 was 4.79 cents per kilowatt-hour; the range for 10-year power purchase agreements in August was 2.8 to 4.0 cents; and the market value for solar power in the same month was 6.359 cents. Hedging therefore results in a real discount. This is not an argument against hedging, but rather an argument against return calculations that use the capture price as the expected revenue.

Risk 5: Supply Chain and Procurement

Since May 2026, the European Commission has been applying a guideline to financial institutions under which inverters from countries of origin classified as high-risk are excluded from EU funding; battery inverters are explicitly included. A grace period applies until November 1, 2026, followed by a stricter phase beginning April 1, 2027. This is an internal guideline, not a published legal act; therefore, no specific regulation can be cited in this regard. For projects receiving EU funding, the origin of the power electronics must nevertheless be included in the procurement review.

Risk 6: Payment Risk

The European solar market is described by a handful of surveys that are subject to revision. The EU’s 2025 installation target was revised upward from 65.1 to 69.6 gigawatts within nine months, almost entirely due to a reassessment of Spain’s figures. For Spain’s new capacity for the same year, there are three figures based on three different definitions. For Germany’s share of solar power in 2025, there are five different data sets. For each figure in a quote, check what it is based on and what reporting period it comes from.

Conclusion: The European solar divide runs along the lines of access

In 2026, the European solar market will be divided not by revenue but by new installations. Three factors support this:

First: For 2026, SolarPower Europe expects a decline for the first time, to 68.1 gigawatts, with a forecast range of 62 to 74.1 gigawatts. Growth, which had been a key driver of returns through 2025, is no longer a valid argument.

Second: Revenue quality is an evaluation criterion, not a selection criterion. According to a SolarPower Europe survey, Spain added 13.4 gigawatts in 2025 and, in February 2026, had the lowest capture rate (9 percent) among the markets surveyed, while Italy—which had the highest monthly revenue among the markets surveyed—lost market share. And Italy’s lead is a gas price that a FER-X spread contract captures as soon as the plant becomes eligible for subsidies.

Third: What ties all four markets together is grid connection. It determines whether a project gets off the ground, and it dictates curtailment—a factor that doesn’t appear in any revenue metric. Anyone investing in European photovoltaics in 2026 will first check for grid connection and permits, and only then consider the price level.

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Frequently Asked Questions About the European Solar Market

Is the European solar market shrinking?

2026 yes, 2025 no. SolarPower Europe expects new capacity additions of 68.1 gigawatts in 2026, compared with 69.6 gigawatts in 2025—a decline of 2.1 percent. The 2025 figure was revised upward in September 2026, primarily due to a reassessment of Spain.

What is the capture rate in photovoltaics?

The capture rate is the ratio of actual solar revenue to the average electricity price across all hours. It decreases when a large amount of solar power is fed into the grid at the same time, driving down the price during those very hours. It is calculated by research firms and is not officially tracked.

Which country in Europe offers the highest solar revenue?

Italy, according to Modo Energy’s measurements: 150.17 euros per megawatt-hour in August 2026 and an annual capture rate of 86 percent as of March 2026. This lead is due to the fact that gas-fired power plants there often set the marginal price, even during hours of strong solar generation.

Why are solar revenue figures so low in Spain?

Because a great deal of solar power is fed into the grid during those same hours. In July and August 2026, solar power was the largest single contributor to the generation mix, accounting for 29.6 and 29.2 percent, respectively—for the fifth consecutive month. The wholesale price fell to a monthly average of 42.44 euros per megawatt-hour in April 2026; solar revenue stood at 53.19 euros in August.

Is a solar farm in Spain worth it despite low revenue?

That depends on the grid connection and the contract structure, not on the market price. According to a survey by SolarPower Europe, Spain saw the largest expansion in its history in 2025, with 13.4 gigawatts. Since March 2026, reserved connection capacity has been subject to a fee, and of 937 transmission grid nodes, only 42 still had available capacity in April.

What changes are coming for photovoltaics in Austria in 2027?

Two provisions of the Electricity Industry Act will take effect on January 1, 2027. Feed-in providers will pay a supply infrastructure fee of no more than 0.05 cents per kilowatt-hour fed into the grid; systems with a grid-active capacity of up to 20 kilowatts are exempt. In addition, a peak-load cap applies to newly constructed or expanded systems.

When will the EEG 2027 take effect?

The planned date is January 1, 2027. Nothing has been decided yet: The government’s draft bill is available as Bundesrat Document No. 470/26 and Bundestag Document No. 21/7867, dated September 7, 2026. On September 24, 2026, the Bundestag debated it in its first reading and referred it to the Committee on Economic Affairs and Energy; on September 25, 2026, the Bundesrat issued its opinion in the first round of deliberations.

References

All sources were accessed on September 10, 2026. For figures provided by an analysis firm, the source and the calculation period are specified; official surveys and data from associations are identified as such.

European Market and Segments

Revenue Quality

Spain

Italy

Germany

Austria

Important Note: This article is intended solely for general informational purposes and does not constitute investment, tax, or legal advice. Information regarding returns, income, proceeds, lease payments, and costs consists of sample calculations or market observations as of the date indicated and does not constitute a guarantee of future results; the actual values that can be achieved depend on location, system design, contract terms, and market developments. For your specific situation, please consult a licensed tax advisor, attorney, or investment advisor. All information is provided without warranty. As of September 10, 2026.

The legal situation described reflects the status as of the date indicated. Where reference is made to drafts, these do not constitute applicable law; changes may occur as the process continues.

Logic Energy Editorial Team https://www.logicenergy.de/