European Solar PPA Market Witnesses 65% Increase From 2022: Pexapark

A recent report by Pexapark on European market outlook found the European PPA market recorded a 65% Increase in solar PAA from 2022, due to stabilising environment in deal-making, over the past twelve months. 

Pexapark in its report mentioned, “Our PPA Tracker recorded a 16.2GW of disclosed contracted volumes – an increase of more than 40% vis- à – vis 2022. Deal count peaked at 272 PPAs – an increase of an impressive 65% from 2022! The balance between corporate and utility offtakes improved – Corporates maintained the lead position in driving the PPA market, but there was an uptick in utility offtake activity. Reduced volatility levels, and strong corporate demand were the key drivers behind utility appetite.”

PPA Projects 

It elaborated, “The corporate showed preference to PPAs directly with projects – Out of the 216 Corporate PPAs that disclosed the seller, 44% were contracted with a utility, with the remaining 56% having a developer/IPP/Fund Manager as the counterparty. We believe the data show the preference of corporates to contract directly with projects to illustrate additionality more clearly, especially when taking into consideration that many utilities contract with corporates on the back of own generation. The role of utilities in the PPA Market evolved – Tracking only the offtake activity of utilities does not paint the complete picture of their impact in the PPA space. As core risk managers, the contributions of utilities to the market have expanded through back-to-back.”

It added, “Spain and Germany accounted for 50% of 2023’s volumes – even though we saw vivid activity across Europe, 8.4GW were concentrated in Spain and Germany, accounting for 51% of the total 16.2GW.”

It further explained, “The solar PPA volumes quadruple both onshore and offshore wind – solar PV was by far more popular in PPA deal-making, holding the lion’s share with a total of 10.5GW – or almost 65% of the year’s 16.2GW PPA volumes across 160 deals. Onshore wind saw 2.3GW across 58 deals, while offshore wind saw 2GW across 20 deals.”

Hybrid PPAs Enters The Scene

The Pexapark report mentioned, “The momentum around renewables-plus-storage increased significantly over 2023, as most players are looking at either introducing storage in their portfolio or increasing capacity. The impetus also manifested in the European PPA market through the emergence of the first Hybrid PPAs for large-scale subsidy-free solar assets.”

Top Performers

Stating the top performing countries with highest PPA, it noted, “Spain remained the top country by volumes and deal count for the fifth consecutive year, with a total of 4.67GW. An impressive 4.3GW across 37 deals came from the country’s solar sector which is reclaiming its reign, with merely 260MW attributed to onshore wind. Last year, the country’s top position (3.9GW) was mostly due to Alcoa’s two onshore wind PPAs of a total 1.8GW with Greenalia and Endesa, which blew the country’s winds. Germany climbed one position and was awarded the silver medal for contracted volumes in 2023, with a total of 3.73GW. Impressively, solar pv (1.77GW across 18 deals) and offshore wind (1.73GW across 14 deals) played an equal role in this achievement, bringing the country’s solar sector back to the top of interest.”

SOLAR PPA VOLUMES QUADRUPLE BOTH ONSHORE AND OFFSHORE WIND

It In 2023, solar PV was by far more popular in PPA deal-making, holding the lion’s share with a total of 10.5GW – or, almost 65% of the year’s 16.2GW PPA volumes across 160 deals. Sunshine-thirsty solar panels outperformed their onshore and offshore wind counterparties at all ends by four times. Onshore wind saw 2.3GW across 58 deals, while offshore wind saw 2GW across 20 deals. In total, since 2018 the European PPA market has seen 28.4GW of solar, 19.4GW of onshore wind, and 6.7GW of offshore wind. Spain is the top solar country with 14.2GW of PPAs, and Germany is second with multiple levels down at 3.6GW. Sweden is the top onshore wind market with 4.5GW, followed by Spain at 3.8GW. Germany dominates offshore wind with 2.8GW, with Great Britain second at 1.7GW.