Solar-plus-storage ‘gaining importance’ in European dealmaking: BayWa r.e. on Europe’s investment landscape

PV Tech: What were some of the highlights for the BayWa r.e. PPA team in 2025? What did you do well that you think you can take into 2026?

Daniel Parsons: Clearly one highlight was the SNCF CPPA in France, which we closed in record time and for a term which is hard to come by in other European markets—25 years. I’m also very proud of the team in terms of BESS and the growing topic of hybrid projects.

The latter will surely be a growing topic in 2026, as the BESS technology will be playing an important role in nearly all European markets. Especially the hybrid cases (BESS plus another renewable energy technology) will be gaining importance in the markets where we see a large pipeline of standalone projects. Similar to Germany, where you literally don’t get a grid connection for a standalone BESS anymore.

Conversely, are there any deals signed, or investments made that you think have been less successful? What can you learn from these examples going into 2026?

In terms of what will be crucial going forward, judging by developments that we see in the markets, I believe we will need to talk about the change in risk allocation when it comes to negative hours. We have seen a lot of requests from multiple parties not to settle if the market price is below zero.

This is at first understandable, but we believe that there will be a lot of periods where we will see negative prices near to zero and where a settlement under the PPA can still be justified due to short-run marginal costs and the value of guarantees of origin (GoO).

More broadly, what were some of the key trends in the European PPA landscape in 2025?

To my knowledge, we have seen fewer deals year-to-date than last year. Let’s see what the last weeks of the year bring, but less volume would align with my reading of a more complex and competitive market on the developer side. To some degree, there has always been a call for shorter terms, but for new-built projects, I believe we will see a lot of ten-year PPAs due to bankability reasons.

In terms of volume, we see a separation between very large global players and smaller new entrants: the global buyers, that are procuring large volumes and concentrate on large minimum sizes, are contrasted by the medium sized companies entering the PPA market, which have smaller demands.

The latter has certainly increased, but they are facing hurdles to the PPA market in terms of deal complexity and minimum sizes, as well as bankability. With some credit support from governmental agencies, this could be overcome.

How have falling prices affected the European PPA space? Do you expect contraction among developers?

Falling PPA prices had only to some degree an effect on the developers, as in most markets, project developers can still access incentive schemes, like CfDs. However, it can be said that the German solar PV market will see an effect from lower PPA prices—which, to our expectation, could lead to fewer large-scale projects being built. But this development also creates opportunities, especially for BESS and hybrid projects.

In terms of markets, we however see Italy as a very attractive market for PPAs and from the governmental auctions.

Is there anything that you’re looking forward to in 2026? Are you generally optimistic about what 2026 will bring?

I’m generally optimistic. In terms of our own projects, we have a few nice projects that are developing well, and the team is looking forward to finding good offtake agreements for them. In terms of markets, we have seen some drastic developments, like the steep rise of negative hours, but I believe that market participants have understood these developments.

Therefore, we will see strong growth in BESS—standalone and in hybrid projects—and I also hope that some of the offtakers are re-adjusting their position on negative price settlements as mentioned above.

What would be the single most significant thing that could happen in 2026 that would advance either your own organisation or the wider market, or both?

In very broad terms more certainty in policy across European markets. For example, the renewable energy act (EEG) in Germany will be renewed. Here, we are hoping to see market-based elements included that allow for PPAs.

And if we are looking at the development of co-located BESS projects, it’s crucial that grid operators align on standards to allow grid import capacities, so that BESS can fully contribute with their desperately needed flexibility to the markets, and on the other hand, contribute to the economic feasibility of the project. This is something that accounts for several markets in Europe.

Read more from our 2025 Review series here.