Germany led the way, with Britain and Bulgaria in second place, followed by Spain, Hungary and France.
By ESS news
Aurora Energy Research’s latest European Co-location Markets Attractiveness Report identifies Germany as the most lucrative region for 2026, followed by Great Britain and Bulgaria.
The report rated 20 regions in Europe based on their attractiveness to investors looking for co-located renewable energy sources. It ranked Germany first due to market size and strong IRR potential, compared to a standalone project.
The United Kingdom and Bulgaria both rank second, with Britain highlighted for its high installed capacity and healthy project pipeline, while Bulgaria also has a strong pipeline and a decent subsidy system.
Other markets highlighted in the report for their potential include Spain, Hungary and France.
Access to the electricity grid and policy are major factors in the attractiveness of a market for investors in colocation projects, the report shows. More than 1,600 GW of renewable energy and energy storage capacity is waiting in grid connection queues in Europe.
Aurora senior research analyst Sameer Hussain pointed out that colocalizing renewable energy generation sources such as wind, solar and batteries can provide an economically viable solution to grid problems.
“As the penetration of renewables accelerates, grid congestion, curtailment and price volatility are becoming defining features of European energy markets. Co-location is no longer a niche solution: it is increasingly important for protecting project economics and supporting investment momentum,” said Hussain.
Co-located solar and storage projects already account for more than 60% of co-located facilities deployed across Europe. Aurora expects this to grow in the coming years, noting that high grid costs in some markets, such as the Netherlands, argue for combining storage with wind and solar energy.
Despite the promise, markets vary quite a bit depending on policies and network costs, which in turn affect the economy.
“Co-location is not a one-size-fits-all investment across Europe,” says Jörn Richstein, Aurora research leader for pan-European energy markets, policies and technologies. “In some markets this is driven by merchant upside, in others by subsidy-backed stability, and elsewhere by the need to overcome grid constraints and limit curtailments.”
Negative prices and restrictions in markets such as Spain, Germany and the Netherlands are a problem major concern for many owners of sustainable projectsbut co-location – and battery storage in particular – is being touted as a way to get more value for their investment.
Co-located storage can help shift excess generation from non-synchronous generation sources such as wind and solar to battery storage and release to the grid when necessary, making sustainable projects more valuable. Aurora’s report noted that battery revenues could decline by as much as 20% by 2040 due to market saturation, so co-location is an attractive and safe investment for BESS developers too.
So are hybrid power purchase agreements (PPAs). gain a foothold in Europewith Spain being the main activity. More than 700 MW were contracted in the European hybrid PPA market by 2025, and Aurora researcher Rebecca McManus said the growth points to “increasing confidence among both corporate buyers and producers in co-located and hybrid asset structures.”
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