Beyond curtailment: Why Greece's electricity challenge in the mid-term may be about missing demand, not excess renewables

A market at a crossroads

Greece's electricity market stands at a peculiar crossroads in late 2025. Renewable capacity is scaling faster than anyone predicted five years ago, yet the revenue picture for nearly every market participant – from solar developers to gas operators to storage investors – has become more uncertain, not less. The rush to decarbonise has delivered impressive nameplate growth, but it has also exposed a fundamental mismatch: the system is building supply faster than it is building the flexibility and demand needed to absorb it. This timing problem is not a theoretical concern for the 2030s; it is shaping investment returns, wholesale price patterns, and project bankability right now.

The rise of curtailment

The most visible symptom of this mismatch is curtailment. What began as a marginal phenomenon in spring shoulder months has steadily grown into a structural feature of midday market operations. By the end of 2025, up to 15% of renewable output may be curtailed. When solar output peaks and demand remains flat, wholesale prices collapse — sometimes into negative territory — and grid operators are forced to curtail renewable generation that has no outlet. Each curtailed megawatt-hour represents not just a lost revenue opportunity for the asset owner, but a systemic inefficiency that raises average costs for consumers and undermines the financial assumptions that justified the original investment. The contradiction is clear: Greece is installing clean capacity at record speed while simultaneously throwing away an increasing fraction of the energy it produces because the system lacks the flexibility to use it.

Storage as a partial solution

This is where the discussion about battery storage often begins — and where it frequently stalls. Even with 3 GW of storage, curtailment would fall to single digits, around 7%. Batteries are presented as the solution to intermittency, and they partially are. However, the economics of storage come with their own challenges, as we have previously examined.

The case for co-location

Co-location with renewable generation has emerged as one of the most effective ways to stabilise battery economics while simultaneously improving the capture rates of solar and wind projects. When a battery is paired with a solar farm at the same grid connection point, it can absorb output during surplus hours and dispatch during evening demand peaks, converting otherwise-curtailed energy into bankable revenue while also relieving the local grid. This arrangement reduces grid connection costs, accelerates permitting timelines, and allows the combined project to offer firmer, more predictable output to offtakers, strengthening PPA negotiations and lowering the risk premium demanded by lenders. However, the terms under which these installations operate still remain uncertain and unregulated. For example, it is not clear whether such batteries can also operate as standalone installations, reacting to market signals regardless of their co-located renewable counterpart. If not, the remuneration for the flexibility they provide to their paired installation may not be sufficient to support a viable business case.

The demand growth gap

But co-location alone will not solve the deeper challenge — Greece's electricity demand growth is not keeping pace with its renewable supply growth. The National Energy and Climate Plan envisions aggressive electrification of transport, heating, and industrial processes, yet the actual rollout of flexible demand has lagged projections. Electric vehicle charging infrastructure is expanding, but smart charging protocols that direct vehicles to charge during midday surplus hours are not yet standard. Heat pumps are gaining adoption, but time-of-use tariffs and demand response programmes that would incentivise winter load shifting remain limited. Industrial electrification, particularly in energy-intensive sectors such as cement, metals, and desalination, has enormous potential to absorb low-cost midday power, but procurement frameworks that reward hourly load alignment rather than flat volumetric consumption are still nascent.

Market-wide consequences

The consequences of this demand shortfall ripple across the entire market. Solar projects see their capture rates erode as midday prices weaken, making merchant revenue assumptions harder to defend. Wind projects fare better because their output profile is less concentrated in surplus hours, but they are not immune to price compression as overall renewable penetration rises. Gas plants shift from baseload to peaking, earning higher unit margins during scarcity hours but operating fewer hours per year, which stresses fixed cost recovery and challenges the financial viability of maintaining dispatchable capacity. Even hydro resources, which can flexibly dispatch into high-value hours, face revenue uncertainty as price volatility increases and the gap between surplus and scarcity hours widens.

The coordination challenge

The short-term challenges facing Greece's electricity market are ultimately coordination challenges. The technologies needed to integrate high shares of renewables already exist and are cost-competitive; what is missing is the alignment of investment timelines, regulatory frameworks, and market incentives to ensure they are deployed in the right sequence, at the right scale, and in the right configurations. Storage co-located with renewables addresses part of that puzzle by improving capture rates and stabilising project revenues. Measures that increase electricity demand as envisaged in the NECP must also stay on track. Flexible demand addresses another part by converting surplus renewable energy into productive economic activity rather than curtailment. Hybrid contracts and diversified revenue streams address the bankability gap that has left storage developers struggling to finance projects on volatile wholesale revenues alone. None of these solutions are sufficient by themselves, but together they form a coherent strategy for navigating the next three to five years — the window in which Greece's renewable buildout will either deliver on its promise of lower costs and greater energy security, or stumble into a fragmented, inefficient outcome that leaves every market participant worse off.