The Impact of Energy Arbitrage on the Market Value of Solar Power Across Europe

The increasing prevalence of very low electricity market prices during periods of peak generation is having a profound impact on the attractiveness of photovoltaic systems. This risk can be mitigated by means of battery energy storage systems, which leverage energy arbitrage strategies. This study provides a comprehensive assessment of the market value and yearly profit of utility-scale photovoltaic systems across 29 European countries, based on 2024 data. It highlights the economic differences in photovoltaic profitability among countries and investigates how the integration of battery storage technologies enhances it. The analysis considers utility-scale photovoltaic plants, both without and with Battery Energy Storage Systems (BESS) of varying capacities (0.33, 0.50, and 0.67 hours), managed by an optimization algorithm that performs energy arbitrage by storing photovoltaic generation during low-price periods and discharging it during high-price periods. The model considers the regional differences in solar irradiance levels and the specific dynamics of local electricity markets. Results indicate that photovoltaic market value in 2024 varied significantly across European countries (from a minimum of 35 €/MWh in Sweden and Norway to a maximum of 90 €/MWh in Ireland and Italy),consistently aligning with the annual mean day-ahead electricity price. Mean market values of 63.1, 75.3, 80.2, and 84.8 €/MWh were calculated, respectively, for systems without batteries and with batteries of 0.33, 0.50, and 0.67 hours of capacity. Yearly revenue generation for a utility-scale photovoltaic system varied greatly across countries during 2024, with Italy being the most profitable (135-140 k€/MWp) and Norway and Sweden the least (around 30 k€/MWp). Photovoltaic investments were generally cost-effective in all countries in 2024, assuming a perfect forecast. However, the addition of a BESS system for energy arbitrage was profitable in only 40% of the countries, with revenues not covering depreciation costs in the others. The yearly revenue from BESS also varied significantly, with Bulgaria earning up to ten times more than Norway (38 k€/MWp vs. 3 k€/MWp).