Solar PV is a cornerstone of the global energy transition. It is cost-competitive with conventional generation technologies on a standalone basis, despite costs remaining higher than 2021 due to supply chain challenges (Lazards, 2024). The UK and many other countries rely on an aggressive solar rollout to meet net-zero commitments. However, the very success of solar deployment threatens its own long-term economics. This phenomenon, known as price cannibalisation, is increasingly shaping the financial viability of large-scale solar projects.
Price cannibalisation occurs when high levels of solar generation flood the electricity market, particularly on sunny days, leading to an oversupply that depresses prices. In some cases, this price collapse becomes so extreme that wholesale electricity prices turn negative, forcing generators to pay to offload their power. This trend has been observed in various markets, including the UK, where the increasing frequency of negative prices signals an urgent need to rethink solar’s role in the energy system.
For solar project owners and investors, price cannibalisation poses a growing concern. When market prices fall sharply during peak solar production hours, the revenue potential of projects declines, making investments less attractive. While many large-scale PV assets in the UK currently benefit from government-backed Contracts for Difference (CfDs) or long-term Power Purchase Agreements (PPAs), these are finite length and project economics are very sensitive to the pricing of the “merchant tail” beyond fixed contracts. An increasing number of projects are becoming exposed to wholesale price risk.
The effects on cannibalisation are also being reflected in a lower solar capture rate – the average prices solar generators earn relative to the overall energy market average. In Spain for example, rates fell from 0.7 to 0.36 between 2023 and 2024. Lower capture rates are always bad news for solar developers as they often mean lower PPA prices, directly impacting the financial viability of new solar projects.
Addressing this issue requires both policy intervention and technological innovation. Market reforms that encourage flexible demand, improved energy storage solutions, and enhanced grid infrastructure could help mitigate some of the effects of price cannibalisation.
However, a more immediate and effective solution lies in solar tracking technology, our Latitude40 dual-axis tracker mitigates the cannibalisation challenge. Unlike traditional fixed-tilt solar which generates peak output at midday, tracking technology dynamically adjusts panel angles to follow the sun’s movement. This results in a wider daily generation profile, with increased production during morning and evening hours—precisely when electricity prices tend to be higher. By capturing more value from the market and reducing exposure to extreme midday price collapses, tracking technology can significantly improve the financial outlook for solar projects.
Solar trackers have multiple benefits for energy infrastructure owners. By smoothing out solar peaks, tracking contributes to a more predictable and sustainable electricity grid; and as we discussed last week, it lowers grid connection costs. Longer, more continuous daily generation is a better match for co-located batteries and hybrid project returns.
We need to rethink the challenge of scaling solar and move beyond just adding “dumb capacity”. The UK is stuck in the 2010s: smarter, better technology choices are proven and available. Solar tracking is a crucial weapon in our armoury — not just to increase renewable energy output, but also to deliver power at the right time and at a sustainable price. Let’s pivot and make sure every megawatt is valuable in a rapidly evolving energy landscape.