Data shows renewables curtailment is ‘breaking records’, consequently investors are seeking to hedge against losses by investing in storage assets
Wind and solar curtailment is becoming an increasingly acute problem for the renewable energy sector. A report published by Aurora last week warned that the energy intelligence provider’s grid modelling for Great Britain, Spain, and Italy shows that renewable curtailment will double to 27 TWh by 2030. Meanwhile, energy forecasting company Amperon recently claimed that solar and wind curtailment in the US was exploding after it reported that, in 2024, four of the seven US ISOs [independent system operators] set annual records for curtailed renewable energy, with 2025 subsequently “breaking those records again”.
The surge in curtailment is a massive concern for renewables investors who are experiencing a fall in their anticipated returns. Consequently, the priority for many such investors is to balance their portfolios by investing in energy storage assets as a means of hedging against potential curtailment-related losses. This was an issue highlighted in the latest edition of Tamarindo’s Finance Quarterly (download your copy here), which covered some of the key conclusions of the recent Financing Energy Transition conference in London. In a panel discussion, focussed on future finance, development and optimisation trends in the energy storage industry, Paul Mason, chief investment officer at Harmony Energy, said wind and solar curtailment was forcing investors to explore opportunities for investing in energy storage assets. He added that new investors were entering the energy storage market, a trend that was probably driven by the “increased number of products around revenue certainty”. Mason also said that this had “unlocked more potential for lower cost of capital investors”, and meant that investors that were previously only considering large portfolios were now prepared to invest in single projects of “hundreds of megawatts”.
Significant wind and solar curtailment in Europe
Meanwhile, Shane Power, investments director at NTR plc, said that there were investors who had traditionally had exposure in the wind and solar sectors who were using battery storage as a way of hedging their portfolios “particularly as we’re seeing a lot of constraint, curtailment and negative price issues across wind and solar technologies in Europe”. Power said another key trend was the duration of storage projects increasing. “What used to be a half-hour capacity play is now moving into two to four-hour plays, very much focused on energy arbitrage becoming a core tenet of that revenue stack”, Power explained. Mason added that investors who have exposure to subsidised renewables projects are seeking to hedge their portfolios because they are now seeing subsidies coming to an end. Another key driver, according to Power, is non-subsidised projects that may have CPPAs [corporate power purchase agreements] that are “economically curtailed when negative power prices come in” – he said such projects are seeing their base cases eroded significantly and one way to address that issue is by adding a battery to a scheme.
Securing grid connections more challenging
Panellists also observed that it is becoming increasingly difficulty of get grid connections, with the result that there will be a greater focus on how to make better use of those connections that have been secured, Mason said. He added: “When we develop projects, we take a battery-led approach, but we always look if there’s suitable land near to a battery development, we’ll look to put some solar on it to make use of the grid connection.” Power said that co-location can mean “different things to different people”. He continued: “In some instances it’s just a solar-BESS project sharing a grid connection but with dedicated capacity. And so yes, the economics can look better because you’re sharing grid across two projects, but it doesn’t necessarily have a huge impact on the business case for each in terms of how they’re going to operate on a day-to-day basis.” Power added such projects were more common than “true hybrid” schemes where, for example, solar and BESS is “actually sharing grid” and there is a need to determine how that project is “going to be operated on an ongoing basis and the interface risks between the two”. But he said that these types of hybrid projects were now slowly beginning to emerge in the market.
Strategic communications, insight and events for the global energy transition.