Why 'MMA' could be the next big thing for wind power producers

During Montel’s Nordic Energy Day in Oslo last week, Kjetil Holm, head of origination at trading company Axpo Nordic, introduced a new abbreviation for the power industry, “MMA”.

The abbreviation MMA may not be entirely unfamiliar, as it can refer to “Mixed Martial Arts” but Holm was not referring to martial arts.

Instead of power purchase agreements (PPAs), Holm now strongly believes that MMA is the future.

“I think PPAs are more dead than alive,” he said when opening his presentation.

Axpo is not alone when it reports very low activity around PPAs at the moment. “The position on wind and solar in Nordic is more or less absent,” Holm said.

This aligns with the overall picture in Europe. European corporate power deals are down 40% this year, compared to 2024 levels.

Four reasons for the fall

He then listed some of the reasons why he believes power purchase agreements have lost their relevance:

The combination of balancing cost and low prices is “causing a lot of cost and pain for all existing wind farms and solar parks”, according to Holm.

He warns that these issues will lead to little new wind and solar power in the Nordic countries.

“What's coming online now is financial investment decisions made one, two years back in time”.

For a wind power producer, there can be a huge difference between ‘PPA as produced’ and the baseload agreements.

“We had this fantastic product in the Nordics – ‘PPA as produced’. But due to cannibalisation, balancing, and negative spot prices, all asset owners need to optimise in the short-term markets.”

He went on to say that those who have entered ‘PPA baseload’ agreements are in a good position, as they can shut down the wind farm and still make money from hedging.

If, on the other hand, you do not have such a “baseload” agreement, you get nothing if you shut down your wind farm due to, for example, the risk of high imbalance costs.

“So, the balancing costs are resulting in a new market. We call it MMA – multi-market agreement. So, we’re moving from PPA to MMA.”

This is an MMA

An MMA is a contract form where producers optimise the production and sale of electricity across several markets.

It differs from a PPA, where one commits to a fixed price and a single buyer over a longer period.

With an MMA, the producer can participate in several short-term markets and adjust production based on where the electricity yields the highest value.

This is the contract form Holm and Axpo now believe will become increasingly relevant.

Holm explained that at Axpo, they use all markets to optimise the most valuable megawatt-hours.

“There is more activity in short-term markets now than ever before,” said Holm.

Short-term perspective can drive up long-term prices

He highlighted the manual Frequency Restoration Reserve power markets (mFRR) as an example. These are markets where transmission system operators purchase balancing services from producers and consumers to stabilize the electricity grid.

Axpo has balancing responsibility for around 3GW of wind power in the Nordic countries alone.

“Most traders in this room didn’t know what MFRR was. Now everyone is talking about it.”

This also means that assets are optimized for the short-term markets. So, if a corporation wants to buy wind power on a long-term basis, they need to pay a premium for that.

“Global warming will increase investments later. There's no financial investment decision on wind and solar now, but that will come later”, according to Holm.

After painting a somewhat bleak picture of the future for traditional power contracts, Holm concluded by saying he remains optimistic about the future of long-term power agreements.

“It’s getting more complex, but it also offers many opportunities if you manage to navigate the market correctly”, the analyst said.