Don't panic, but 'green at any cost era' over as corporate PPAs plunge

There’s no cause to panic that a steep fall this year means the market for wind and solar power purchase agreements (PPAs) is disappearing among Europe's corporate power buyers – but it is changing, said experts at specialist advisory Pexapark.

At about 4.3GW, the European corporate PPA market was more than 40% lower in the first half of 2025 than a year earlier with a particularly steep crash in May, according to the latest data.

Corporate energy buyers spent the first half fretting about how to strike deals that reflect risks such as negative pricing and possible price cannibalisation by future renewable energy capacity.

Pexapark's lead analyst for renewables and PPA markets Nicolas Briet said the first half was a marked change from the past few years, when corporates made the PPA running as part of their push to meet green targets.

“We’ve seen buyers spooked by negative pricing [when power prices fall below zero]”, which is set to reach record levels in Europe this year, said Briet.

The drive for sustainability had also previously seen corporates willing to pay a “green premium” in deals above what utility power buyers would consider “fair value” – but that willingness is now diminishing, Briet added.

“That premium could be really substantial. For instance, in France we've seen up to 20 or 30 euros of premium compared to the contract fair value. But as corporates are getting more sophisticated they're not willing to overprice these products so much.”

So does the plunge in deal volumes spell bad news for the corporate PPA market, which is seen as a key component of Europe’s overall decarbonisation push?

“I wouldn't say let's freak out," said Briet, adding that the corporate PPA market is not going away. “It’s interesting that on a monthly basis… in May we've seen an 80% drop, which is quite massive. So then there was a lot of talk about the market crashing.

“Then we look at June and it's back to sort of normal. So, you have seasonal trends, and for sure there are challenges around the pricing, around how you allocate risk in a contract. But these challenges can be managed for sure.”

Corporates roared back in June with more than 1.3GW of deals signed, according to Pexapark, among them a debut public PPA deal by Transport for London, the operator of London's iconic tube trains and buses which sealed a 15-year agreement for solar power with EDF.

Overall PPA levels were 25% lower in the first half, once utility deals are taken into account. Pexapark said deals involving utilities and traders held up better than among corporate power buyers as they are more adept at managing risk factors.

BESS 'has officially arrived'

Briet said one of the keys to alleviating the risks in the European PPA market is the seemingly unstoppable rise of battery energy storage systems (BESS), which can play a key role in smoothing out the production variables that give deal-makers headaches when it comes to wind and solar.

Briet said “we've seen the BESS deal flow just explode. This market has officially arrived. We can say that today”.

The first half of 2025 saw 4.6GW/9.2GWh of BESS capacity contracted under offtake deals – a figure that’s already triple the whole of 2024.

The surge in activity reflects a host of new markets with BESS deals beyond the previous stalwarts of the UK and Germany. Deals are also becoming more sophisticated and the duration of the storage involved longer.

Pexapark said in its analysis of the first half that European PPAs seem to have entered "a more disciplined phase". It added: "The corporate PPA market is undergoing a transition and the era of 'green at any cost' appears over for now.

"In the near term, the European PPA market is likely to continue experiencing more selective activity, but with more innovative structures and increased integration of BESS solutions."