Hybrid Power Plants on the Rise: The Key to Grid-Serving Power Usage

Industry News – September 5, 2025

Solar hybrid power plants, consisting of photovoltaics and battery storage (PV+BESS), are becoming increasingly significant for ensuring a stable energy system. Indeed, they were the focus of both the Intersolar Forum and the Intersolar Europe Conference at Intersolar Europe 2025, which addressed the opportunities, challenges and business models of hybrid power plants.

Global solar power capacity reached a record level of 2.2 terawatts in 2024. However, the increasing expansion of solar power also poses challenges, namely negative electricity prices and overloaded grids at peak generation times due to a lack of storage options. Hybrid power plants provide a solution here by temporarily storing solar power and feeding it into the grid at a later time. This improves grid integration and increases the profitability of renewable energy projects by exploiting price spreads.

The UK – a trailblazer in Europe

With 62 percent of the European market, the UK is considered a trailblazer in Europe where PV+BESS systems are concerned. This is thanks to targeted funding instruments, such as:

  • Capacity market
  • Contract for difference (CFD) system
  • Accelerated approval procedures/regulatory reforms.

Should charging batteries from the grid be allowed? That is the million-dollar question.

Expansion in other European countries is lagging behind potential, partly due to regulatory hurdles. A particularly controversial issue is whether battery storage systems should also be allowed to draw gray electricity from the grid. In many places, there is a restriction in place stating that, if the renewable energy system is subsidized, the storage system may only be charged with renewable electricity. However, flexible use of battery storage, including the option of grid charging, not only significantly improves the economic viability of hybrid power plants, but also provides grid-stabilizing flexibility.

Energy arbitrage – electricity trading as a business model

This is precisely where energy arbitrage, a promising business model for PV+BESS systems, in which electricity is stored when it is available at low prices and sold when electricity spot prices are high, comes into play. The challenge currently facing project developers is that, since yields are subject to unpredictable market and price dynamics, banks and investors are still cautious about financing hybrid power plants that base their revenues on energy arbitrage.

System services and capacity markets for PV+BESS

More stable revenue streams can be achieved by participating in capacity markets. Both Spain and Germany are currently planning to introduce these kinds of markets, where additional guaranteed capacity is to be provided through tenders, including from renewable energy plants with battery storage systems. Solar hybrid power plants are also important for grid stability because they can provide ancillary services such as frequency and voltage control. By using grid-forming inverters, such plants can increasingly replace the synthetic inertia previously provided by fossil fuel power plants.

The technology is ready, but the framework conditions are not

Hybrid power plants are still being blocked by some economic obstacles, such as:

  • Double grid charges incurred when charging and discharging the storage system.
  • No targeted support schemes for hybrid power plants.
  • Complicated approval procedures for retrofitting storage systems.
  • The guarantees of origin (GOs) system requires redesign.

Energy storage systems in hybrid power plants have not been able to charge electricity from the grid if the electricity from the connected renewable power plant is to be sold with GO certificates. In the future, precise measurement and accounting solutions could ensure that a distinction is made between gray and green electricity in the stored electricity volumes. This, in turn, would allow the introduction of baseload and pay-as-produced PPAs for hybrid power plants – an important step towards opening up additional PV+BESS business models.

Conclusion: There is potential, but it demands regulation.

Intersolar Europe 2025 clearly showed that hybrid power plants are central building blocks of the energy transition. However, regulatory reforms and innovation-friendly market conditions are essential to realize their potential.
Would you like to watch presentations by renowned experts on business models for solar hybrid systems from the Intersolar Europe Conference 2025? All recordings of the conference sessions are available on our on-demand platform, The smarter E Digital.

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