SolarPower Europe calls for ‘complimentary’ relationship between national auctions and corporate PPAs

However, the report’s authors told PV Tech Premium this week that these diverging trends are not ideal for the European clean energy investment space, and that a more “complementary” relationship between private finance and government-backed auctions will be necessary if Europe is to meet its long-term clean energy deployment goals.

With government contracts providing long-term revenue certainty in a period of considerable economic volatility, and PPAs offering hedges for investors keen to work in Europe’s increasingly technologically diverse renewable energy space, both forms of capacity deployment could be essential to Europe’s shifting energy mix.

Among the ‘central pillars’ of European renewables

This volatile economic environment is a key driver behind the growth in popularity of auctions. Changing risk profiles, a lack of available grid capacity and the growing threat of curtailment in Europe’s more mature renewable energy markets have made the long-term security that can come through a government contract that much more attractive.

However, as Antonio Arruebo, a senior market analyst at SolarPower Europe and one of last week’s report’s authors, tells PV Tech Premium, auctions have long been a cornerstone of Europe’s renewable energy growth.

“Auctions are one of the central pillars for the deployment of solar, and, at the moment, for batteries,” explains Arruebo. “Since 2021, more than 85GW of solar have been delivered through auctions and you can trace back at least one-fourth of all the solar deployment that we’ve had in the EU to auctions. If you just focus on the ground-mounted segment, more than 50% of all the capacity that has been installed has come through auctions.”

Arruebo notes, too, that increasing commitment to auctions from national governments could help drive bid prices down for future auctions, creating a virtuous cycle where a breadth of auction opportunities creates more auctions in the future.

“It’s crucial that governments use auctions as a deployment instrument, because it’s driving support levels to incredibly low levels, in terms of the bidding,” he explains, referring to the bidding prices of successful bidders.

He goes on to argue that the final bid prices have been up to 20% lower than the levels initially proposed by governments, highlighting how demand for government contracts is helping drive prices down to significantly low levels.

Auctions must be technology-specific

The report’s authors, however, noted that auctions need to have a degree of nuance behind them, particularly with regard to the renewable energy technologies for which bids are being made.

“I think it’s really key that we have technology-specific design, especially in the context of legislation such as the EU Net Zero Industry Act that is aiming at adding new layers to auctions that are not necessarily based on the price to compete, but also other, more qualitative, criteria like the origin of the components,” explains Simon Dupont, a SolarPower Europe senior policy advisor and the second of the report’s authors.

“We have to move towards a technology-specific approach, and what we show in the report is that when that’s the case, you ultimately have more successful auctions.”

Arruebo agrees, calling the distinction between technology-specific and technology-neutral auctions “incredibly relevant”. He went on to point out that governments have shifted towards technology-specific auctions, and that this trend needs to continue as solar, wind and storage all become integral parts of Europe’s energy mix.

“Last year, we had 80% of all the capacity that was delivered in auctions come through tech-specific schemes,” he explains. “This has changed in a positive manner over the last few years; back in 2021, 80% of all the auctions were tech-neutral, and reversing this trend is absolutely important. We need auction rounds that are tailored to the specific needs of each technology.”

Arruebo goes on to argue that EU member states should consider “hybrid auctions”, ones that have different components for the different technologies being deployed at a hybrid renewable energy project. This is particularly significant considering the growth of battery energy storage systems (BESS) in Europe; 2025 saw contracts awarded for a record 70GWh of new BESS projects, and the financial benefits of co-locating solar and storage assets are well-documented.

“One of the main recommendations of our report is that member states should start considering hybrid auctions, as one of the main routes for financially supporting the deployment of solar, including battery storage in the mix,” says Arruebo.

‘A very delicate instrument’

When asked about the future of national auctions, the SolarPower Europe analysts say that they could be a key contributor to Europe’s energy mix, provided the conditions are right for their use.

“Auctions are a very delicate instrument for deployment,” explains Arruebo. “You need to set all the conditions right when it comes to the auction design, and all the different elements that Simon mentioned are absolutely fundamental.”

Specifically, Arruebo said that greater tailoring would be needed for the storage sector, as the current auction designs are “really restraining the potential of batteries”.

“There is a limitation on the amount of electricity that batteries can charge from the grid—they want to just allow the battery to charge from the solar asset—but then you’re truly underutilising the full potential of the battery, because then it’s going to sit idle for a large part of the year.”

Dupont, meanwhile, argues that greater attention ought to be paid to the distributed solar sector, and that auctions should consider the requirements of small-scale solar in the same way that they have begun to accommodate the economic realities of different renewable energy technology types.

This is particularly important considering the scale of distributed solar in operation in Europe; while utility-scale solar accounted for the majority of new solar additions in 2025 for the first time in history, European solar is largely driven by rooftop installations, which accounted for 61% of all operational capacity as of the end of 2025.

“In this report, we are focusing quite a lot on the utility-scale segment, but there is also a small-scale solar PV component that we cover, for example, auctions for the rooftop solar segment,” he said. “For this, one aspect that you need to consider is that it’s too complex to have a competitive process for small PV; it becomes unattractive and inefficient to deploy small solar PV.”

PPAs and auctions to complement one another

The strong performance of national auctions, however, does not mean that corporate PPAs do not have a place in European solar. Indeed, the SolarPower Europe analysts note that, in the years following the 2022 energy crisis, private offtake agreements were more popular than national auctions due to the prevailing economic conditions of the time; over time, market dynamics have shifted back in favour of national government auctions, created “untapped potential” for PPAs, now four years removed from the invasion of Ukraine.

“There is an untapped potential for the PPA market, and it’s directly linked to increasing demand and increasing flexibility,” explains Dupont, highlighting how market dynamics can still favour private offtake agreements.

“It has really opened the possibility to hedge in the hours where prices are high,” he continues. “There’s still a lot of volatility and [for] member states that have a lot of solar, but maybe a lot of gas during peak demand or critical hours, storage is the answer as it provides another type of hedge and another type of flexibility.”

The potential is untapped, and for that reason the decline [will be reversed] by Europe being successful in removing the bottlenecks.

However, he notes that the volume of solar PV capacity contracted by corporate PPAs will likely not increase until Europe is successful in “removing the bottlenecks,” referring to challenges facing European power as a whole, rather than the solar space in particular: a lack of available grid capacity, ongoing curtailment in some of Europe’s largest renewable energy markets and uncertainty as to how to best integrate BESS projects into the energy mix.

Dupont argues that both governments and private companies have some responsibility for improving the financial attractiveness of corporate PPAs once these bottlenecks are dealt with, either in the form of introducing new legislation, or rethinking their business cases, respectively.

“A lot is on governments, of course, to create the legislative framework where you have the space for electrification to happen,” he says. “There is a little misalignment in terms of price expectations for standalone solar, because of price cannibalisation and low capture prices, which makes the expectations of PPA prices a bit low compared to the cost of projects. But corporate demand is there and the need for lower prices is there, and PPAs can provide it.”

Ultimately, he says that SolarPower Europe is of the opinion that “we need both” private PPAs and government auctions to help deploy the scale of solar PV capacity that will be required to accelerate Europe’s energy transition; and that these two routes to market must be tailored in a manner that is “complimentary” to each other, and to the macroeconomic conditions of European power.

“It has to be complimentary and in any case, with the targets that we have to decarbonise, we need both,” Dupont says.

Leaders in the European solar sector are turning their attention to this year’s SolarPlus Europe event, to be held in Italy on 15-16 April by PV Tech publisher Solar Media. Information about the event, including the full agenda and options to purchase tickets are available on the official website.