The renewables PPA landscape in Europe

Power Purchase Agreements (PPAs) play a crucial role in securing financing for renewables while providing long-term electricity cost certainty for offtakers in rapidly evolving and uncertain power markets.

We are pleased to introduce a new feature of our European power markets research: Fair value pay-as-nominated PPA price outlooks for utility-scale solar PV, onshore and offshore wind. The feature includes eight European markets: Germany, France, Italy (zonal), Great Britain, Spain, Belgium, the Netherlands and Portugal with the next development expanding the footprint to include the Nordic markets of Sweden, Norway, Finland & Denmark (by balancing area) together with Poland, I-SEM and Greece.

This new feature is part of our scheduled expansion of product and service offerings in Lens Power & Renewables Europe and, as always, we welcome feedback on this and any element of our offerings so we can continue to tailor our services to further match your needs.

The PPA market was resilient in 2024, with contracted capacity up 15% year-on-year

The PPA market in 2024 consisted of deals totalling nearly 19 GW across all agreement types, supported by the continuing desire of corporate energy buyers to reduce price risk and secure multi-year fixed low carbon electricity price contracts.

Our PPA deal tracking database revealed that nearly 90% of PPA activity in 2024 originated in 10 countries, with Spain once again topping the rankings for capacity contracted. Solar PV continues to be the largest producer share, yet portfolio and hybrid and storage agreements are on the rise. Information technology and process industries dominate offtake in corporate PPAs while power retailers and utilities favour utility and route-to-market PPAs.

Opportunities remain for competitive PPA price outcomes in onshore renewables markets

The growing influence of low-cost renewables on wholesale price formation, particularly in spring and summer, is leading to increased volatility and uncertainty. Our wholesale market forecasting indicates that capture rates are set to decrease over the next 5 to 7-years as gas prices decline and demand growth lags renewable supply growth. In turn, the capture cost and risk components in PPA pay-as-nominated prices will evolve.

Material differences in PPA prices emerge in our outlook across markets, driven by the differing pace and magnitude of change, with several markets reaching saturation as price cannibalisation risk sees PPA fair prices fall below our benchmark new-entrant levelised costs.

The next release of this analysis will include price outlooks for the Nordic markets. However, please contact us if you would like to discuss any market in the scope of our hourly coverage that is not shown here, namely the zonal markets of Denmark, Norway and Sweden, and Finland, Greece, I-SEM and Poland.

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• Lens Power & Renewables Europe, Middle East & Africa
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• Lens Solar
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• Lens Energy Storage