The European market for Power Purchase Agreements (PPAs) stagnated in 2025 as corporate activity slowed down. Macroeconomic developments, shifting focus from sustainability towards competitiveness, alongside higher volatility and cannibalisation in power markets, put a strain on the European PPA market in 2025.
While key markets and industries experienced reduced activity, other regions and industries are on the rise. Germany saw PPA activity decrease by almost half, while the Spanish market continued growing on the back of major IT deals. Solar PV was the most contracted technology in terms of volume and capacity amidst record high cannibalisation.
The fundamental price picture was shaped by high and volatile electricity prices, low prices for Guarantees of Origin (GO) and low capture rates, especially for solar in central Europe and wind in the Nordics. Supported by PPAs and subsidy schemes, renewable energy capacity continues to grow at a rapid pace. For the first time in Europe, renewables made up a larger share in power generation than fossil fuels.
2026 will be a year of consolidation as market participants adapt to new realities. For buyers, state aid schemes may alleviate short term market exposure but impose long-term commitments through measures including PPAs. For sellers, decreasing capture rates and increasing balancing costs challenge business models. In this context, battery energy storage systems (BESS) and portfolio PPAs will unlock new opportunities but also yield additional valuation complexity.
Last year a total of 249 PPAs were recorded in Europe, down by 19 compared to 2024. According to the Veyt PPA database, deals signed in 2025 accounted for a total capacity of 15.5 GW, 4% lower than the previous year. Annual delivered volumes marked a significant decrease of 35% year on year to 26.3 TWh, mainly due to fewer offshore wind deals. A growing number of multi-technology and hybrid PPAs also contribute to lower reported capacities and volumes, as exact contract sizes are rarely disclosed.
For the first time, solar PV surpassed wind as the most contracted capacity in the PPA market, not only in terms of capacity, but also for delivered volumes. More than half of contracted capacity (8.7 GW) in 2025 stemmed from solar deals, compared to 3.5 GW in onshore wind and 0.4 GW for offshore wind. Annual delivered volumes stood at 11.3 TWh for solar, 8.6 TWh for onshore wind and 1.7 TWh for offshore wind.
The drop in activity for offshore wind aligns with broader industry trends of slowing deployment across Europe. Only two offshore wind projects, one in France and one in the UK, were completed in 2025. The latest offshore wind auctions in Germany, the Netherlands, and Denmark attracted no bids. The persisting interest in solar PV shows resilience towards increasing cannibalisation. Despite record low capture rates, more than half of all contracted PPAs included solar PV generation, either in single-technology (111), multi-technology (22) or hybrid deals (7). While capture rates for solar decreased sharply, capture rates for onshore wind were more robust. This can provide an explanation for increased PPA activity for onshore wind, to 3.5 GW from 74 contracts in 2025, up from 2.4 GW in 59 deals the prior year.
Spain secured the top spot as most active PPA market in Europe in 2025, both in terms of number of deals (46) and contracted capacity (4.5 GW). This marks an increase compared to 2024 of 9 deals and 1 GW. Poland and the UK complete the podium for both deal count and capacity. In Poland, the number of deals increased by 10 deals to 33 in 2025, while contracted capacity decreased to 1.7 GW, down from 3.1 GW the year before. The UK reported slightly higher capacity than Poland at 1.8 GW in 27 PPAs. While the number of deals only reduced by one deal, contracted capacity showed a decrease by 0.5 GW in the UK between 2024 and 2025. Italy also showed consistently high activity with 1.6 GW contracted in 26 deals, marking a 60% increase in capacity despite a decrease in the number of PPAs.
In Germany, the country that led the leaderboard for number of PPAs in 2024, activity almost halved from 40 deals worth 1.8 GW, to 21 contracts totalling 1.2 GW. The drop in activity can be explained by a combination of macroeconomic developments, continued subsidy support for new renewable projects and state aid schemes targeted towards industrials.
Other markets on the rise are Greece where capacity saw a 30% increase, Romania which placed in the top ten markets for the first time with 10 PPA transactions, and Ireland that saw a close to threefold increase in capacity to 714 MW in 2025.
The vast majority of reported transactions in Veyt’s database last year were corporate PPAs. Nevertheless, the corporate PPA activity decreased by 19% compared to 2024, while activity for utility PPAs grew by 38% to a total of 40 deals, and route-to-market PPAs increased threefold to 15 contracts. The main drivers of this development are the challenging macroeconomic situation for many sectors, as well as increased price risk due to cannibalisation and volatility. However, utilities, energy traders, and route-to-market providers have greater ability to manage these risks and are stepping-in in order to at least partly offset the reduced corporate appetite.
A more nuanced picture emerges when looking at structural differences between the different industrial sectors. The IT sector continued to dominate the buy side with 34 PPAs and 3.9 GW signed in 2025. Thanks to large players such as Amazon and Apple, who contracted 1.3 GW and 0.8 GW respectively, the IT sector experienced continued growth by 10% in 2025. This trend is especially noticeable in the Spanish market, where Veyt’s database recorded 12 corporate PPAs within the IT sector, up from 3 deals in 2024.
Another sector with increased appetite for PPAs was transport and logistics, which accounted for 18 deals signed in 2025. This development was mainly driven by a surge in activity of railway companies such as Spanish Renfe, French SNCF or German DB.
On the other hand, Veyt recorded weakened demand from energy intensive and heavy industries such as the chemical or steel industry. PPA volume signed by the chemical industry dropped by 53% year on year across European markets, whereas activity from steel producers came almost entirely to a halt. Apart from the macroeconomic development inducing a re-focus in competitiveness over sustainability, this demand drop can also be explained by uncertainty and anticipation related to the rollout of state aid programs such as the industrial power price schemes in Germany and Italy in 2026, particularly the Industriestrompreis and Energy Release 2.0.
This development was partly counteracted by demand from hydrogen producers picking up in 2025. The RFNBO criteria on additionality and temporal matching are designed to incentivise offtake agreements for new-built renewable assets. Veyt recorded 7 deals with a related volume of 1.3 TWh in 2025, as just over 3 GW of electrolyser capacity had passed FID in Europe.
2025 was also a year of major consolidation in the European renewable hydrogen industry, marked by project cancellations and postponements. Overall, about 2 GW of electrolyser capacity was downscaled or cancelled in Europe by early 2025, and there is substantial uncertainty on the progress towards the 2030 EU electrolyser target of 40 GW.
For more information on PPA activity see our deal flow section.
In 2025, average day-ahead electricity prices across Europe increased compared to 2024, with the exception of parts of the Nordics and Baltics. Key markets in central Europe saw prices increase, for example, by 14% to EUR 90/MWh in Germany, 12% to EUR 80/MWh in the UK and 4% to EUR 65/MWh in Spain. Southern Nordic bidding zones experienced the largest price increases, between 21% in Swedish SE4 and 39% in Norwegian NO1. In the northern Nordics prices decreased by up to 63% in NO4 to a level of EUR 8.7/MWh, and the Baltics saw decreases of up to 7%, to levels between EUR 80-85/MWh.
However, while the yearly average power price increased in most markets, so did price volatility. Specifically, the occurrence of prices at or below zero increased in central and southern Europe. The countries with the largest number of zero or negative price hours were Spain with 805 such hours, followed by France (742) and the Netherlands (649). Almost all markets outside of the Nordics and Baltics reported increases of negative price hours primarily driven by high solar generation during daytime in summer. Many negative price hours also occurred in the Nordics, specifically in Northern Sweden and Finland where wind generation is the main driver. However, the occurrence of such hours decreased compared to 2024.
For more information on the day-ahead power market developments see our latest monthly report.
The installed capacity of renewable energy sources continued to rise in 2025. Solar capacity across Europe increased by 20% year on year, on par with growth the prior year. Onshore wind growth was lower but still significant at 8%. Offshore wind saw limited capacity additions in 2025 with only two projects at a total capacity of 950 MW coming into operation. Energy storage in particular from BESS experienced major growth across Europe. In Germany alone, 3 GW of storage systems were connected to the grid in 2025. In Belgium, capacity doubled to 0.9 GW and Romania experienced a more than threefold increase to 0.5 GW.
Total power generation from solar PV in 2025 increased by 19%, in line with capacity additions. Despite capacity additions for onshore wind, generation levels remained almost flat between 2024 and 2025. Offshore wind marked a slight increase in generation of 3% driven by the added capacity. Overall wind and solar generated a record of 30% of electricity in the EU, surpassing fossil fuel generation for the first time.
The high solar output, especially during summer months shaped the price picture and impacted capture rates across Europe. For solar PV capture rates continued to decrease to record low levels, while wind capture rates stabilised in most markets.
In Germany, average annual capture rates in 2025 reached 52%, more than 6% points down compared to already low levels in 2024. In May, monthly capture rates reached as low as 32% in Germany, and 18% in Spain. The Spanish solar market recovered in the second half of the year resulting in a yearly capture rate of 55%. Capture rates for solar for the year 2025 were consistently low across Europe, ranging between 50% in Austria and 60% in the Netherlands. Exceptions were markets with more dominant wind energy share such as the UK and Nordics.
In turn, the Nordics experienced decreasing capture rates for onshore wind in 2025 compared to 2024. In Finland, the yearly capture rate stood at 55%, marking a decrease of 11% points within a year. Even stronger decreases were observed for Swedish zones SE1 (52%) and SE2 (51%) which previously achieved 71% and 67% respectively. For the rest of Europe, capture rates for onshore wind increased slightly, breaking the decreasing trend of years prior.
In line with trends for onshore wind, offshore wind capture rates stabilised and remained close to 90% in core markets. For example, in Germany, offshore wind performed at a capture rate of 95% in 2025, compared to 91% in 2024. In the UK, Europe’s largest market for offshore wind, capture rates were at 91% a slight increase from 90% the year prior.
The higher baseload prices resulted in higher fair value for PPAs across most of Europe in 2025 compared to 2024, despite high capture costs and lower guarantees of origin (GO) prices. The northern Nordics stood out with lower baseload prices, high cannibalization for wind and increasing imbalance cost.
A one-year baseload PPA in Germany including GOs, in retrospect, would be valued at EUR 90.3/MWh, 13% higher than the same contract in 2024. In last year’s review and outlook, Veyt forecasted a German baseload contract for 2025 at 94.2 EUR/MWh, 4% above achieved values. In Spain, a one-year baseload contract for 2025 would be worth EUR 65.9/MWh.
The charts below show the fair value assessment for a one year pay-as-produced PPA contract, accounting for balancing costs and GO prices, for a few selected markets and technologies. In 2025, for solar one-year pay-as-produced contracts, low capture rates contributed to widening the gap towards baseload delivery. On the other hand, for wind, capture rates remained more stable compared to previous years. Thus, the effect on pay-as-produced prices was less pronounced than for solar.
While it is not possible to retroactively sign a Power Purchase Agreement (PPA), we provide these historical figures as benchmark. In particular, to track market developments as well as to assess whether a PPA signed for the given period would have achieved a value higher or lower than the contract price in the wholesale market.
The price outlook for PPAs throughout 2025, specifically quoted prices for 10-year pay-as-produced PPAs, showed movement according to three main drivers: developments in capture rates, PPA market liquidity and fluctuations in power price futures. For onshore wind, market liquidity and PPA activity across Europe were generally lower than for solar. In addition, stable capture rates provided a more secure outlook, resulting in limited movement in PPA price quotes. In Germany, price ranges for onshore wind fluctuated between a low level of EUR 70-77/MWh and a maximum of EUR 72-78/MWh throughout the year.
For solar PV, another year of decreasing capture rates also affected PPA price outlooks. From a higher level at the start of the year, price quotes decreased in summer months aligning expectations to continued increases in cannibalisation. In Germany, solar PV PPAs were quoted at or above EUR 50/MWh in early 2025 before stabilising at EUR 35-43/MWh after the summer. A similar downward adjustment was observed in other markets with high liquidity for solar PPAs, for example Spain, Romania, France and Sweden.
Veyt’s PPA price index – a fair value for a three-year pay-as-produced PPA – closely tracked price developments in power futures and their impact on PPA valuations. In central Europe, the year 2025 started with a rally on gas prices amidst cold weather and low storage levelsthat put upwards pressure on power and PPA prices. Towards the end of the first quarter, price expectations relaxed to a lower level before a peak in carbon and gas prices in June showed effect on PPA prices in summer months. The PPA price index remained more stable throughout autumn before a downwards adjustment into early December.
For more information on market price developments see our market prices page.
Overall, Veyt expects 2026 to be a year of transition in the PPA market. In the power market increasing flexibility is on the verge of breaking the long-standing trend of price cannibalisation, though rapid capacity additions from solar PV and wind continue to affect market volatility. At the same time, a tightening carbon market is putting upward pressure on power prices, while industrial consumers are partially shielded from these price signals through state aid schemes.
In the PPA market, a clear shift away from simple contract structures toward more complex configurations that better reflect and mitigate underlying risks is expected. Battery energy storage systems (BESS) are playing an increasingly central role, both in the power system and within PPAs themselves. PPAs combining multiple generation technologies, promise a compromise between valuation complexity, shaping delivery profiles and distribution of risk, making them attractive for the years to come.
These developments will also shape sectoral trends: more experienced players such as the IT sector and industries with specific needs, for example hydrogen, are more likely to enter into PPAs, including those with complex structures. Meanwhile, industries eligible for state aid are expected to use this support to secure target price levels and are likely to turn to PPAs as a means of payback or long-term price stabilisation. The timing of these payback obligations is expected to delay the full ramp up of their corporate PPA activity. Macroeconomics tied to a more risk-averse buyer profile will further impact corporate priorities
For single technology contracts, solar is expected to remain the most popular option, supported by high availability and low prices. In 2026, offshore wind PPAs are likely to be concentrated on route-to-market solutions specifically in the UK, while other markets lag on capacity additions following zero-subsidy auction rounds that attracted no bids. Positive long-term signals in early 2026, such as the UK awarding more than 8 GW of new offshore wind capacity and an investment pact announced in the North Sea, point towards a recovery of the offshore wind industry. While the investment pact specifically mentions PPAs, subsidy schemes such as CfDs remain the more attractive path for new offshore wind assets amidst high costs. Onshore wind activity will be driven by legacy assets exiting support schemes as well as new project developments in markets where capture rates remain stable.
The outlook on PPA prices for the next year is shaped by opposing trends. On the one hand, base prices are expected to remain elevated as carbon markets tighten. In addition, the surplus in the Guarantees of Origin (GO) market is expected to decrease putting upward pressure on GO prices. On the other hand, the increase in volatility generation from renewables will impact cannibalisation, decreasing capture rates of the dominant renewable generation technology per market. At the same time balancing of renewable generation remains a challenge and will continue to incur high imbalance costs.
Overall, Veyt’s PPA price index points towards PPA fair value prices settling at a level similar to those observed in 2025, across different European markets and technologies. Though especially in markets with high capture rates, fair value PPA prices may remain below what is considered viable revenues for new assets. This can result in transactable PPA prices adjusting upwards beyond the fair value, or reduced PPA market liquidity, if offtakers are not willing to bridge the price gap. In this environment, BESS can reduce the impact of cannibalisation thereby stabilising revenues for renewable projects and aligning hybrid PPA price levels more closely to baseload prices.
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