Germany, Great Britain, and Bulgaria have emerged as the most attractive markets in Europe for renewable energy co-location, according to the latest European Co-location Markets Attractiveness Report by Aurora Energy Research. The report, which assesses 20 regions, outlines how investors are increasingly pairing storage with solar and wind to navigate tightening grid constraints and rising market volatility.
As renewable penetration accelerates across the continent, co-location—the practice of situating renewable generation and battery storage at the same site—is transitioning from a niche strategy to, a critical requirement for project viability.
Germany takes the top spot in the index, driven by its significant market scale and a high Internal Rate of Return (IRR) upside when compared to standalone projects. Great Britain (GB) and Bulgaria share second place:
- Great Britain: Benefits from a massive installed capacity and a pipeline backed by Contracts for Difference (CfDs), which helps mitigate the impact of severe grid connection delays.
- Bulgaria: Offers a combination of strong subsidies and favourable project economics, with co-located solar already exceeding 40% of its installed PV capacity.
Aurora also identified Spain, Hungary, and France as “markets to watch” due to ongoing regulatory reforms that are expected to enhance investment conditions.
The report highlights a staggering 1,600 GW of renewable and storage capacity currently awaiting grid connection across Europe, with roughly 550 GW in GB alone. Co-location is being utilised as a tool to improve grid access and reduce costs in markets like the Netherlands and Greece.
“Co-location is no longer a niche solution: it is increasingly critical to protecting project economics and sustaining investment momentum,” said Sameer Hussain, Research Senior Analyst at Aurora Energy Research.
In 2025, Europe’s co-located capacity reached 6.3 GW, with solar-plus-storage accounting for over 60% of deployments. However, the drivers for this growth vary by region. “In some markets it is driven by merchant upside, in others by subsidy-supported stability, and elsewhere by the need to overcome grid constraints,” noted Jörn Richstein, Research Lead at Aurora.
The case for co-location is being reinforced by intensifying market pressures. In 2025, negative price hours surged, exceeding 500 hours in Spain, Germany, and the Netherlands. Furthermore, “capture price cannibalisation”—where high renewable output drives down market prices during peak generation—is expected to worsen. Solar discounts in Iberia could approach 50% by 2030.
Co-located storage allows developers to shift generation to higher-priced periods, reducing curtailment—which is forecast to rise from 10 TWh in 2024 to 33 TWh by 2030 across key markets.
While subsidies remain the primary route to market, hybrid Power Purchase Agreements (PPAs) are gaining momentum. Over 700 MW of hybrid PPAs were contracted in 2025, primarily in Iberia, France, and GB.
According to Rebecca McManus, Research Lead at Aurora, this growth signals rising confidence among corporate offtakers. In markets like France and Portugal, hybrid structures can increase PPA capture values by up to 50% compared to traditional “pay-as-produced” contracts, providing a more stable and lucrative revenue stream for developers.
