From Dunkelflaute to heatwaves: the new reality of Europe's energy markets

Deanna Greenhalgh, our Senior Commercial Manager, BESS, explores how this summer's heatwaves, record solar generation and growing intraday price volatility are reshaping Europe's electricity system.
Brown grass in the foreground, with trees and city behind

European energy markets have been built around one defining question: Can we get through the winter?

Our industry language reflects it. Dunkelflaute – the prolonged periods of cold, dark, windless weather when electricity demand is high and renewable generation is low – has become the benchmark stress test for power systems across Europe.

Generation planning, grid investment, capacity markets and system resilience have all been designed with winter in mind. But this summer has made something increasingly clear. The next great challenge for Europe’s energy system isn’t replacing winter; it’s adding summer. We’re entering an era of dual-peaking energy markets, where both seasons can place extraordinary pressure on electricity systems.

Across Europe, this summer has delivered prolonged periods of exceptionally high temperatures.

In the UK, we’ve seen repeated heatwaves, record solar generation, electricity margin notices and intense scrutiny of how the electricity system was managed during periods of extreme weather. Ofgem has now launched a formal review into system operations during June’s heatwave, highlighting just how seriously these events are being taken.

This isn’t simply another weather story. It’s evidence that climate change is becoming one of the defining variables shaping modern energy markets.

The assumption that summer is the easier season for energy is rapidly disappearing. Winter challenges are familiar: high demand, lower renewable output, heating load and fuel security. Heatwaves create an entirely different operating environment:

  • Electricity demand rises as cooling becomes essential rather than optional
  • Power stations become less efficient as cooling water temperatures increase
  • Transmission equipment operates less efficiently in extreme heat
  • Hydro resources become constrained
  • Wind generation often weakens during periods of persistent high pressure
  • Interconnected countries experience the same weather simultaneously, reducing the ability to rely on imports.

Many of the traditional safety valves become weaker at exactly the moment they’re needed most. This summer, Britain experienced periods of tight operating margins during extreme temperatures, requiring emergency balancing actions even though customer supplies were maintained.

That would have been almost unthinkable as a summer scenario a decade ago. The result is that climate change is rewiring the economics of electricity. The important point isn’t simply that summers are getting hotter. Climate change isn’t just creating more extreme weather; it’s reshaping how electricity markets function.

It’s changing:

  • when electricity is consumed
  • when generation is available
  • how assets perform
  • how networks are operated
  • how wholesale prices behave throughout the day
  • where flexibility and resilience become valuable.

One of the biggest shifts is happening within the trading day itself.

As solar generation reaches record levels around midday, wholesale electricity prices can fall sharply and, increasingly, even turn negative in some European markets. But as the sun begins to set and businesses are still running air conditioning, lighting and industrial processes, demand remains high while solar output rapidly declines.

The result is a much steeper evening ramp, tighter system margins and significantly higher prices over just a few hours. In other words, volatility is no longer simply seasonal. It’s becoming intraday. At AMPYR Distributed Energy, we’re seeing a profound shift. Energy markets are becoming structurally more dynamic rather than seasonally predictable.

For decades, businesses primarily worried about winter price spikes. Increasingly, volatility can emerge at any time of year and at any time of day.

One of the fascinating contradictions is that the same weather placing stress on electricity systems is also delivering record levels of solar generation. Heatwaves are simultaneously creating the challenge and part of the solution.

The scale of that change is already becoming clear.

According to Solar Energy UK, solar supplied 14.4% of all electricity generated in Great Britain during July, the highest monthly share ever recorded. That surpassed the previous record of 12.4%, set only in May, and was significantly ahead of the 9.6% recorded in July 2025.

In total, solar generated 3.2TWh of electricity during the month.

The daily figures were equally striking. On 12 July, solar accounted for 18.8% of Britain’s electricity generation across the day and, at its peak, supplied 44% of generation between 10.30am and midday, reaching a maximum output of 15,427MW.

Solar is no longer a marginal contributor to Britain’s electricity system. It is becoming a major force in shaping when power is abundant, how wholesale prices behave and where flexibility is most valuable.

The challenge is no longer whether solar works in northern Europe. It is how we make better use of it.

Much of this generation arrives within a concentrated window during the middle of the day, when wholesale prices can fall sharply. Yet demand increasingly continues into the evening, when cooling loads remain high but solar output rapidly declines.

Capturing abundant daytime generation and shifting it into periods of higher demand is therefore becoming one of the defining opportunities of the energy transition.

For businesses with onsite generation, every kilowatt-hour produced is one that doesn’t need to be purchased from an increasingly volatile wholesale market.

Increasingly, however, the opportunity lies in combining solar with battery storage.

Batteries allow businesses to store excess daytime generation when prices are low and use it during the evening peak, when electricity is often at its most expensive and the grid is under the greatest strain. As intraday price spreads widen, storage becomes more than a resilience tool; it becomes an increasingly valuable commercial asset, helping businesses optimise energy costs while providing greater flexibility to the wider electricity system.

That’s why we’re seeing batteries move from an optional add-on to a core part of distributed energy strategy.

We’re already seeing Europe’s electricity system adapting. Networks are evolving, battery deployment is accelerating, flexibility markets will continue to mature and digital optimisation will improve. Businesses need to adapt too.

The energy strategies that succeed over the next decade won’t be those designed for the market we’ve known for the past 20 years. They’ll be built for a system where volatility is more frequent, flexibility is more valuable and resilience is increasingly a source of competitive advantage.

The question is no longer whether Europe’s energy markets are changing. It’s whether businesses are prepared for the market they’re entering, not the one they’re leaving behind.