The photovoltaic revolution does not stop: lights and shadows of the progress towards decarbonisation

AleaSoft Energy Forecasting, May 2, 2025. Photovoltaic energy continues to break records in Spain and consolidate its leading role in the energy transition. However, its rapid progress poses new economic and operational challenges that require a paradigm shift, with a commitment to solutions such as hybridisation with energy storage to guarantee the profitability of projects.

At the end of the first four‑month period of 2025 -January, February, March and April- a trend that seemed unstoppable has been confirmed: photovoltaic energy production in Spain has grown uninterruptedly month after month. Every clear day seems to bring a new record for solar energy generation. What was exceptional a few years ago has now become routine. And this is undoubtedly excellent news for the environment, the national economy and the country’s energy future.

Spanish solar photovoltaic production [GWh]
Source: Prepared by AleaSoft Energy Forecasting using data from Red Eléctrica.
(*) Provisional data, pending review by Red Eléctrica following the April 28 blackout.

Source: Prepared by AleaSoft Energy Forecasting using data from Red Eléctrica.
(*) Provisional data for April 2025, pending review by Red Eléctrica following the April 28 blackout.

This acceleration in photovoltaic energy is due to the massive deployment of installed capacity in recent years, improved efficiency of solar panels and favourable weather conditions that have reinforced the role of the sun as a driver of the energy transition. The direct result is a reduced need for fossil fuel energy generation, a significant reduction in CO₂ emissions, a lower volume of natural gas imports and a steady, daily step towards energy independence.

However, this transformation process also brings with it significant challenges for the market and investors. The sustained increase in solar energy production during the central hours of the day is causing prices captured by photovoltaic technology in electricity markets to fall. This spring has already seen hourly prices at historic lows. This has direct implications for the economic value of solar projects, especially those without hedging mechanisms or storage capacity.

PPA (Power Purchase Agreements), particularly those of the pay‑as‑produced type, have seen their values adjusted downwards in the face of expectations of lower prices in solar hours. This situation is generating uncertainty in the financing of new projects and has slowed down investment decisions that seemed secure only a few months ago. In other words, the success of photovoltaic energy in its mass deployment is forcing an evolution of the business and operating model of these plants.

The clearest and most viable solution on the horizon is hybridisation with battery energy storage systems. The possibility of storing solar energy during peak production hours and then feeding it into the grid at times of higher demand -and therefore higher prices- allows the recovery of value for the projects, stabilising revenues and facilitating their bankability. This is not just a technological solution, but a strategic and structural evolution of the energy model. Hybridisation is already the major trend of the immediate future.

At AleaSoft Energy Forecasting and AleaStorage they have been anticipating this need for some time and providing fundamental tools to face this transition successfully. The company is helping to promote and make hybrid solar plant projects viable, providing rigorous analysis on the expected revenue calculation in different market scenarios. In addition, they develop financial models to assess the profitability and economic sustainability of these investments, both for developers and financiers.

At AleaSoft Energy Forecasting and AleaStorage they are convinced that the combination of renewable energy generation with storage is the key to ensuring the viability of the electricity system of the future. One that is more flexible, cleaner, resilient and self‑sufficient. The photovoltaic revolution has been the first big wave of change. Now, hybridisation with batteries must be the next. At AleaSoft Energy Forecasting they will continue to support, with data, analysis and long‑term vision, the development of this new energy paradigm.

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At AleaSoft Energy Forecasting, the AleaBlue division provides short‑ and mid‑term energy market forecasts, which are fundamental for energy management, planning, bid generation, risk management, and short‑ and mid‑term hedging. AleaBlue services include demand forecasts, as well as price forecasts for intraday markets and ancillary services, essential for energy storage price arbitrage.

Source: AleaSoft Energy Forecasting.