New 'golden era' for European green power deals as Iberdrola tops sellers' list

The number and volume of European power purchase agreements (PPAs) surged last year, according to a new study, which says the market for green electricity deals has entered a “golden era” on the continent.

Last year saw 16.2GW of disclosed contract volumes signed between parties, a jump of over 40% from the year before, said Swiss market intelligence provider Pexapark in its latest European PPA outlook.

The total number of PPAs signed was 272, up by 65% from 2022.

“Continuously weathering multiple peaks and troughs, the market is now entering its ‘Golden Era,’” said Pexapark.

“Factors contributing to this optimistic outlook include decreased volatility vis-à-vis 2022’s peaks, a stabilising pricing environment, and growing maturity from both buyers and sellers in managing energy risks.”

“These conditions have unleashed a plethora of innovations and advancements in the European PPA Market, commencing a new chapter for the continent’s energy transition.”

Corporates were the biggest buyers, said Pexapark, but the balance with utilities also improved.

Corporate entities secured 11.95GW (28% up on 2022) across 218 deals (66% up on 2022).

Utilities represented 23% of the total volume – an increase from 2022’s 18% share — and also 18% of the deal count. This translated to 4GW – more than double the 1.96GW of 2022, across 48 deals – a 60% jump year-on-year.

Spain continued to lead the market both in volumes and deal count for the fifth consecutive year, with 4.7GW. Germany rose to second position, with volumes last year at 3.7GW.

Solar PPA volumes dwarfed those of onshore and offshore wind, accounting for 10.5GW across 160 deals.

Onshore wind saw 2.3GW across 58 deals, while offshore wind saw 2GW across 20 deals.

Spain's Iberdrola was the top seller both by volume and deal count, said Pexapark, with its "gold medal" coming due to nine deals with corporates, amounting to 908MW.

There were some issues for the sector, however, including the price of debt and cannibalisation risk impacting pay-as-produced pricing structures.

Luca Pedretti, co-founder and COO at Pexapark, said: “One of the main trends we see is the evolved role of utilities in the market, offering solutions to challenges posed by price volatility, intermittency and higher green standards.”

“Project owners, utilities and corporates are joining forces to leverage each other’s strengths, and the role of more structured PPAs will increase.”

“Risk managers such as utilities have an opportunity to further evolve into ‘market integrators’ unlocking significant innovation in the market.”