According to Wood Mackenzie data, the scale of renewable energy projects signed under the power purchase agreement (PPA) model in Europe in 2024 approached 19GW. The company’s “European Renewable Energy PPA Tracker Report” states that the European PPA market experienced a surge last year, with solar and wind projects accounting for 80% of the total contracted installed capacity.
Spain and Germany emerged as leading markets in Europe, accounting for 30% of the total contracted installed capacity. Poland, the United Kingdom, and Greece rounded out the top five markets in terms of all transactions.
Corporate PPAs continued to dominate the market, accounting for over 70% of the total transaction volume last year. Dan Eager, Director of European Renewable Energy Research at Wood Mackenzie, noted that the technology and data sectors became the primary power off-takers in 2024. He added that these sectors are “increasingly relying on PPAs to sustain future operations and achieve sustainability goals.”
Wood Mackenzie’s report also highlighted an increase in PPAs for integrated renewable energy generation and battery storage projects, which helps address issues during negative pricing periods.
Eager further commented, “Although still a relatively small portion of the overall market, the hybrid storage model that bundles renewable energy generation with battery storage in a single contract is gaining popularity, particularly in energy-intensive industries and data centers requiring 24/7 energy matching.”
Wood Mackenzie anticipates that there will still be opportunities to secure competitive PPA deals in the next two years, especially in the solar and certain onshore wind markets. The report also predicts that hydrogen PPAs may emerge as regulatory policies become clearer.
According to Wood Mackenzie’s wholesale market model, capture rates will decline over the next five to seven years, with demand growth expected to lag behind the growth rate of renewable energy supply.
“During this period, as European natural gas prices decline, market average prices will follow suit. In turn, the capture prices and risk structures in PPA pay-as-produced prices will also change,” explained Eager. “Despite the volatile market environment, our fundamental-based forecasts indicate that there are still opportunities for mutually beneficial PPAs. The key lies in accurately understanding each market and technology to find the right products for developers and off-takers.”
