Operational wind and solar PPAs dominate European offers, report says

Saur Energy reports that operational assets now account for nearly 40% of standalone power purchase agreement offers across Europe on the LevelTen Energy Platform. The data indicates a distinct split by technology, with operational projects representing nearly 60% of wind PPA offers on the same platform.

Why buyers favor existing assets

Plácido Ostos, LevelTen Energy Director of European Analytics, notes that operational assets inherently reduce risk by minimizing development obstacles and permitting delays seen in new-build projects. Consequently, they typically offer a quicker and frequently cheaper path to power than constructing new green energy infrastructure. Ostos adds that for purchasers prioritizing speed and price rather than green additionality claims, transactions involving operational projects tend to be more appealing.

Price trends and market premiums

The LevelTen Continental Index shows the European-average solar PPA P25 climbing 0.4% quarter-on-quarter to 0.86. However, LevelTen Energy notes that current European solar PPA prices stand at 86% of their Q3 2024 levels. By comparison, European wind PPA prices hold at 99% of the Q3 2024 mark. Plácido Ostos, LevelTen Energy Director of European Analytics, stated that this quarter’s data confirms the price premium wind maintains over solar in numerous markets. He explained that this disparity stems from the greater value wind PPAs provide to buyers in most regions experiencing high solar buildout.

Germany’s hybrid PPA strategy

• The German hybrid PPA P25 price fell 12.7% to €65.50/MWh this quarter, according to the LevelTen Hybrid Index.
• Pieter van der Meulen, LevelTen Energy Country Manager for Germany, states that the case for hybrid PPAs in Germany is strong.
• Van der Meulen notes that while Germany still requires significant solar expansion to meet 2030 renewable energy targets, high numbers of negative-price hours and rapid PV buildout are making standalone solar harder to finance.
• He explains that pairing solar with storage allows developers to shift power output into the evening demand peak, providing buyers with a more predictable product featuring a shaped generation profile.
• Van der Meulen adds that historically low gas-storage levels underscore the urgency of this hybridisation drive, noting that every megawatt-hour of solar delivered in the evening via battery storage reduces reliance on gas.
• For buyers, a hybrid PPA offers a hedge against winter price spikes alongside the shaped generation profile.

As gas storage levels remain historically low, the ability to displace gas usage during evening peaks becomes a critical operational advantage. The hybrid model thus serves a dual purpose: it secures a stable, predictable supply for buyers while simultaneously reducing the system’s dependency on fossil fuels during peak demand hours.

What to watch

Buyers continue to favor wind over solar, with LevelTen Energy research showing wind PPA offers were almost twice as likely to be selected than solar-only ones. While the report highlights this preference, it does not specify a timeline for when the current solar price recovery trend might shift or reverse.