Corporate buyers shift strategies as European PPA prices rise

Meanwhile, market analyst LevelTen Energy’s ‘Q3 European PPA Price Index’, which tracks price offers from sellers, found that the European average 25th percentile price for solar PPAs rose marginally, by 0.4%, compared with the previous quarter.

Finally, JP Cerda, CEO of Renewabl, a UK-headquartered platform for energy data management and procurement, spoke to PV Tech Premium earlier this year about trends in cross-border PPAs. In another conversation with us this week, he agrees with the trends identified in the LevelTen report in two areas.

Firstly, negative pricing in Spain has reached its limit and prices are not expected to fall much further. Secondly, a shaped PPA combining different technologies is increasingly advisable, as these offerings help to stabilise both price and profile risks.

Cerda attributes much of the 5% European PPA price increase reported by Pexapark to oil, arguing that external fuel markets, particularly oil and gas, remain fundamental drivers of renewable energy prices.

Alongside these trends, changing corporate procurement strategies and the growing impact of negative electricity prices are also reshaping the market. With significant differences between individual European markets, understanding the drivers behind rising prices, and identifying new and more nuanced tools to acquire electricity, are key for corporate offtakers.

Settlement periods lengthening

Earlier this month, Renewabl hosted a webinar examining exposure to negative-price hours, and Eduardo González Solá, director of business development and power origination at independent power producer (IPP) Galileo, noted that settlement periods—the recurring timeframes used to calculate financial payments between a developer and an energy buyer—are getting longer.

Hourly cash settlements allow buyers and sellers to identify periods of high price exposure, preventing longer settlement windows from masking the risks associated with negative pricing. However, settlement periods are increasingly moving towards monthly or even quarterly intervals, which gives developers a weaker hedge, according to Cerda.

“If you look at hourly settlement, which should be the standard, then you can identify the risky hours,” says Cerda.

“Power is still priced and billed on an hour-per-hour basis, but the longer the window, the less the contract tracks the hours when a buyer is actually exposed [to price risk] and those are usually the hours that matter most and it will come back to bite you.”

Negative prices a ‘structural feature’

Zero and negative-price hours are also becoming more commonplace across Europe, particularly in countries with greater renewable energy penetration.

“Negative prices have moved from being occasional episodes into a structural feature of European power markets, reflecting the rapid growth of renewable generation and a lag in storage and broader system flexibility,” said Bruno Brunetti, head of renewables revenue streams at S&P Global Energy, who also spoke at the Renewabl webinar.

Exposure varies considerably between markets. Spain, Portugal, Germany, France and the Netherlands are among those most exposed to negative prices, while Great Britain, the Nordics and Italy have experienced relatively few negative-price hours, or none, during the current reporting period.

The value of solar PV relative to average wholesale electricity prices continues to decline, particularly in Spain. However, improvements in energy storage technology could help shift solar electricity sales away from zero or negative-price periods and towards hours when electricity commands a higher price.

The failure to anticipate the emergence of negative pricing has left a number of corporate buyers exposed. Companies that signed solar PPAs in Spain five to ten years ago, before negative prices became a structural feature of the market, are now feeling the financial consequences.

Many of these contracts have no zero-price floor, leaving buyers exposed to significant losses. Spain recorded 596 negative-price hours in the first half of this year—more than during the whole of 2025.

“Now the contracts that you sign in Spain have a zero-euro floor that protects the sellers from negative pricing,” says Cerda.

Rising prices and shorter-term PPAs

In response to these trends, average PPA prices are ticking upwards, which inevitably make these contracts less attractive to corporate buyers looking to diversify their energy procurement towards green electricity.

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Two fundamental factors influence PPA prices, depending on the type and duration of the contract.

Long-term PPAs, typically lasting ten to 15 years and associated with new projects, are priced according to the developer’s construction, materials and maintenance costs. As material and building costs are increasing in general, developers face higher project costs, which are ultimately reflected in the prices offered to buyers.

Shorter-term PPAs, typically lasting three to five years and linked to operational assets, are driven by different market fundamentals. Rather than reflecting construction costs, their pricing is more closely linked to wholesale electricity prices, which are themselves influenced by international oil and gas markets. Consequently, the global fuel crisis is also pushing up prices for short-term clean energy PPAs.

“So, the fundamentals are completely different and the reason why prices are going up is for two completely different reasons that just happen to coexist at the same time,” explains Cerda.

However, if a PPA is structured to match a company’s consumption profile, there is still considerable potential to achieve savings over the longer term, adds Cerda.

Five years ago, Cerda says there was “quite a lot of buzz” around additionality, with corporates keen to support new renewable energy generation and predominantly signing ten to 15-year pre-operational PPAs.

However, this is shifting towards shorter contracts, covering three to five years, because of where prices are going and regulation focusing more on traceability than additionality. Corporates are also increasingly focusing on hybrid power procurement. PV Tech Premium reported on this trend at Solar Media’s Renewables Procurement & Revenue summit earlier this year, and Plácido Ostos, director of European analytics at LevelTen Energy, said there are a number of benefits associated with shifting to different type of PPA.

“Operational assets naturally lower risk and bring fewer development hurdles and permitting delays compared to new-build projects”, explained Ostos in the LevelTen Q3 report. “For these reasons, they generally represent a faster, and often more cost-effective, route to power compared to new green energy infrastructure. For buyers focused primarily on speed and price over green additionality claims, deals tied to operational projects can be more attractive.”

PPAs have traditionally been structured on a pay-as-produced basis, but this is also changing. There is an increasing shift towards fixed solar-shaped profiles, with developers pricing the associated profile risk into their offers, according to González Solá.

Hybrid PPA structures

Developers are also increasingly turning to hybrid structures combining different technologies to reduce their exposure to cannibalisation risks. LevelTen Energy data shows that Spain and Portugal account for nearly half of all European hybrid PPA offers, while the Nordic and Baltic markets account for more than 40%. This suggests that energy storage and hybrid procurement are gaining traction beyond Europe’s most saturated solar markets.

Using its analysis of corporate consumption profiles from an annual, monthly and hourly perspective, Renewabl’s advice is to match a technology mix to each corporate’s own consumption profile, typically wind and solar, for example 30% solar and 70% wind.

“Essentially, whilst battery storage becomes mainstream and cheap enough to create a natural base load without using gas, the best strategy for a corporate [signing] a PPA would be to analyse [their] consumption profile and match the production of the renewable energy assets as much as possible to how [their] consumption is shaped,” explains Cerda.

These PPAs typically combine wind and solar, although incorporating hydro as a baseload source can be particularly advantageous. Even large offshore wind energy producers are selling shaped profiles to meet more stringent institutional accounting requirements from the likes of Science Based Targets initiative (SBTi) and the RE100 Reporting Guidance from the Climate Group and CDP. Large corporate buyers can also procure specific gigawatt-hour allocations from separate wind and solar generators.

“The case for hybrid PPAs in Germany is strong,” wrote Pieter van der Meulen, country manager for Germany at LevelTen Energy, in the company’s Q3 report. “The country still needs a major expansion of solar to meet its 2030 renewable energy targets, but with high numbers of negative-price hours and rapid PV buildout, standalone solar is getting harder to finance. Pairing it with storage allows developers to move power output into the evening demand peak, and lets buyers sign a more predictable product with a shaped generation profile.”

LevelTen’s report also found that wind consistently commands a greater price premium than solar in many markets. With the potential to generate electricity across a 24-hour period, wind is less exposed to the market dynamics that depress solar PPA prices during periods of high generation. This provides another compelling reason for corporate buyers to consider hybrid procurement strategies.

Ultimately, the future of corporate PPAs is likely to depend less on simply securing renewable generation and more on matching generation profiles to consumption while managing price exposure.