Pexapark's European Market Outlook 2024-More Utility, Hybrid PPAs In Offing

Switzerland-based Pexapark, a specialist provider of Power Purchase Agreement (PPA) price reference, risk and portfolio management software and advisory services for renewable energy, has some interesting predictions for 2024, when it comes to Europe.

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In its latest European Market Outlook 2024Report, the Pexapark predicts that Germany will be back on top in 2024 with PPAs, overtaking Spain which led in 2023. 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. Readers will be aware that the European market, like other western markets in the US and Australia, has a very high share of residential solar, which explains the 'low' PPA numbers vis a vis the total capacity addition numbers of 56 GW for Europe in 2023.

Of the 16.2 GW of renewable PPAs signed in Europe in 2023, Pexapark estimates that these two accounted for over 50% at 8.4GW.  Even as the corporate segment led with PPA's, Amazon was the top corporate in deal count as well as volume, with over 1.67 GW of PPAs signed. Iberdrola was the top selling utility selling 908 MW of renewables capacity. Beyond that, IT  conglomerates maintain their top ranking in 2023, with a total of 3.6GW worth PPAs across 25 deals. Consumer Staples also maintained its leading position in terms of deal count while also jumping to the second position volumes-wise.

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Pexapark also tracked early signs of PPAs for Green H2 Production – Another notable trend in 2023 was the rapid growth of PPAs destined to power upcoming green hydrogen and ammonia plants, with a mix of nuances painting the whole picture. PPAs linked to green hydrogen and ammonia production were announced in Norway, France and Germany, leveraging new and existing capacity.

In its top predictions for 2024 for Europe, the firm predicts corporate PPAs to show a healthy 25% growth over 2023, by crossing 20 GW in 2024.

Hybrid PPAs are likely to find their feet in 2024, as regions prevent the cannibalisation of renewable energy like solar and onshore wind etc. With advanced grid services, industry maturity and expertise around commercialisation of energy storage assets resulting in the first Hybrid PPA for a subsidy-free asset in Great Britain, the trend will be picked up in Spain and other countries too.

Share of Utilities in PPAs will increase, as they manage risks better with back-to-back PPAs with corporate offtakers, which fall
under an umbrella set of offerings to help buyers and sellers manage price volatility, intermittency and higher green standards.