Solar PV and wind were the leading technologies, accounting for close to 80% of the contracted capacity out of 19 GW of renewable energy power purchase agreements (PPA) signed in Europe in 2024, says Wood Mackenzie. Both these technologies contributed similar volumes.
In 2023, Europe entered RE PPAs for 16.2 GW capacity according to Pexapark (see Europe Contracted 16.2 GW RE Capacity Via PPAs In 2023).
Research Director, European Power & Renewables at Wood Mackenzie, Dan Eager, sees Iberian markets offering particularly ‘appealing conditions’ for both solar PV and onshore wind PPAs.
Spain and Germany alone accounted for 30% of the total capacity, affirming their leading position in this space. Poland, the UK and Greece entered the top 5 across all deal types, namely corporate, route-to-market and utility segments.
According to Wood Mackenzie’s Europe Renewables PPA Tracker report, corporate PPAs dominate the market, representing more than 70% of the regional market, followed by route-to-market deals. Power-guzzling technology and data sectors were the primary offtakers as they procure renewable energy to meet their sustainability goals and sustain future operations.
There is also a growing trend towards offtake agreements for renewables co-located with battery storage, mainly to address the challenge of negative pricing periods, observes Wood Mackenzie. Their contribution isn’t large as of now, but energy-intensive industries and data centers particularly prefer this arrangement to secure a 24x7 electricity supply.
When it comes to pricing, PPA prices declined last year, as did wholesale power prices, but the trend varies by region and technology.
Analysts observe that low-cost renewables are having a bigger impact on wholesale electricity prices, especially in spring and summer, causing more price swings and uncertainty. Wood Mackenzie’s modeling shows that the capture rates will likely fall over the next 5–7 years, as renewable supply grows faster than demand and power markets struggle to stay flexible.
“Over this period average market prices will also be falling as European gas prices decline. In turn, the capture price and risk components in PPA pay-as-nominated prices will evolve,” added Eager.
Despite different market conditions, the report writers believe that there are still good opportunities for mutually beneficial PPA deals provided the offtakers and suppliers can find the right fit for each market. In the near term, one can look forward to hydrogen PPAs in Europe once there is regulatory clarity on the offtake.
