EU PPA market defined by falling prices, corporate demand and political shifts

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LevelTen highlighted Poland and France as particularly notable markets where prices fell. Image: Michael Förtsch on Unsplash.

Falling prices, political uncertainty and growing corporate demand defined the European renewable energy PPA market in 2024.

This is according to two reports published today from LevelTen Energy and Pexapark, which asses the PPA market for Q4 and the full year 2024 respectively.

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Prices continue to fall

LevelTen’s Market-Averaged Continental Solar Index saw prices decline by just over 2% from Q3 to Q4 2024. The average price across the continent was €62.31/MWh (US$64.79/MWh), €1.33 less than the average in Q3. Year-on-year (YoY), this represents a 13.3% decline, or €9.53/MWh (US$9.91/MWh).

The data was drawn from 183 price offers from 162 renewable energy projects across 22 European countries, based on offers made within LevelTen Energy’s marketplace.

The report highlighted Poland and France as particularly notable markets where prices fell.

The former saw a €5 drop from Q3 to Q4 2024, a 6% change and the steepest decline of any country included in the report. Polish prices declined more than the EU average YoY, too; down €13.22, or 14.5%, compared with Q4 2023. LevelTen said the price trend was “A sign that the PV sector there continues to mature and gain momentum in a nation still highly dependent on coal power.”

French prices also remained relatively low, at an average of €67.00. This represents a 19%, or €15.74, decline from the same period in 2023.

Pexapark’s Renewables Market Outlook 2025 report said that while the overall European market was stabilising after the price shocks of 2022-23, there was also an “accelerated frequency of low, zero and negative pricing hours”, which led both sellers and buyers to seek new forms of PPA deal.

“The number of negative price hours rose across all European markets except Italy,” Pexapark said. “The drivers were merely the fundamentals of exponential renewables expansion and the seasonal impact of intermittent renewables.”

The frequency of negative pricing led to changes in the allocation of risk in PPAs, the report said, primarily: “Compensation of the buyer to the seller during negative hour events, defining the price triggers and the impact of risk allocation to the overall price of the PPA.”

‘Shifting political winds’

Alongside low and increasingly negative pricing, LevelTen’s report pointed to political shifts which have impacted the EU’s power purchase market.

“Fast-shifting political winds in France amidst a budgetary crisis have significantly heightened regulatory risk for developers there, who may be looking more to corporate buyers to provide the offtake contracts they need to finance their projects,” LevelTen said.

LevelTen has previously pointed to the rise of right-wing political parties across Europe, and particularly in France, as a potential threat to national renewable energy targets.

“2024 was a complex year for European politics”, the report said. “The Labour Party’s victory in the UK seems poised to usher in an exciting new chapter of clean energy development there. In France, political tides seem to be turning in a different direction.”

The report pointed to the December no-confidence vote in French Prime Minister Michel Barnier which raised “budgetary concerns” over the country’s renewable energy subsidy scheme. Similar dynamics in Germany have triggered a snap election in February and the attendant uncertainty it brings.

“Needless to say, political crises in the EU’s two biggest economies is cause for concern, and is contributing to a heightened degree of regulatory uncertainty,” the report said.

Corporate demand growth

Political and regulatory uncertainty around subsidies and schemes like Contracts for Difference (CfD) broadly pushed project developers towards corporate offtakers, LevelTen said.

In the case of France, the company said project developers “may be looking more to corporate buyers to provide the offtake contracts they need to finance their projects.”

Pexapark’s annual report broadly supports this trend; it found that corporate PPAs largely “sustained” the EU market amid a 59% drop in utility PPAs. 157 new corporate players entered the European PPA market in 2024 enabling around 5.4GW of new power capacity.

Of this growth, Pexapark said: “Sustainability and decarbonisation targets are always underlying factors, but market events seem to be significantly more prominent in steering decision-making and creating momentum.”

Information Technology accounted for the most PPA capcacity of any sector, with a total of 3.8 GW across 38 deals led by Amazon; “Over 2024, Mr. Bezos went shopping in Spain (756 MW of onshore wind and solar), Greece (360 MW onshore wind), Great Britain (282 MW offshore wind) and Ireland (105 MW onshore wind)”, Pexapark said.

Solar-only PPAs under pressure

Pexapark said that over 2024 it had noticed an increase in PPAs combining multiple technologies, such as solar-plus-wind, tracking 2.7GW of such deals in 2024, compared to 860MW in 2023.

It said the attractiveness of multi-technology PPAs was the certainty they offer on the profile of the supplied volumes, flattening out the profile of, say, a solar-only PPA where production is concentrated in the middle of the day. This is attractive to corporates whose demand profile includes periods in the evening as well as during the day.

“Energy-intensive [businesses] are always enticed by firmer volumes to relieve their shape risk, especially if they are over-exposed to solar,” the report said.

Based on the apparently growing popularity of multi-technology PPAs, Pexapark concluded: “In light of the new realities, a solar-only PPA could be a complicated sell to some.”

The full report can be read here, and our coverage of PPA figures in the North American renewable power sector can be read here.

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