Solar PV Capture Rates in Germany and Spain

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The Capture Rates measures, in %, the ratio between the Capture Price and the Baseload Price a project achieves according to its technology (wind or solar PV) and geographic-specific renewable energy resources (wind speed or solar irradiation) throughout a given period.

Capture Rates have been steadily decreasing as more generation capacity of a specific technology is introduced into an electricity system.

Capture Rates trends

• The Capture Rates in both countries, despite their monthly oscillations, are following a slow, but steady, downward trend.
   
• On average, Capture Rates in Spain are higher than in Germany due to higher solar generation during early mornings and evenings.
   
• Capture Rate volatility in Germany is higher than in Spain. The peak in 2022 for Germany is a result of higher electricity prices during the summer months.
   
• This downward trend is likely a result of an increasing share of solar power in the electricity generation mix of these countries and ultimately reflects a cannibalization effect. Graph 2 presents the evolution of the share of solar PV generation in both countries.

In this scenario where both Capture Prices and Capture Rates are decreasing, we might expect some risks related to the revenue streams and, therefore, the profitability of solar projects. Both Spain and Germany are putting strong efforts into deploying more renewable generation, which will probably increase competition between generators during sunny hours, pushing down the Capture Rates for solar projects even more.

In this sense, hedging with PPAs is a good option for power plant owners to protect their assets against wholesale price trends and cannibalization effects. The fixed prices of PPAs guarantee a more predictive outcome for developers who need to secure their revenue streams and minimise risks, especially in volatile periods, such as the one we have been experiencing.

In the same way, hybridisation and storage applications may also help by introducing complementarity and allowing for energy arbitrage.

Perspectives for 2024

During the past 5 years, the Capture Rates presented a downward trend in both Germany and Spain, with an exception in 2022 for Germany. Due to the growing share of solar generation in both countries, the Capture Rates trend is expected to keep decreasing, as a consequence of a cannibalization effect. At the same time, wholesale prices are in a downward trend in Europe, which pose even more risks for solar PV producers and make PPAs a critical solution to de-risk revenue streams.