The European Power Purchase Agreement (PPA) market for renewable energy experienced a robust rebound in 2024, with nearly 19 GW of new capacity contracted, according to the Europe Renewables PPA Tracker report by Wood Mackenzie.

Spain and Germany led the market, jointly accounting for 30% of the total contracted volume, while solar PV and onshore wind technologies made up roughly 80% of the agreements, with both contributing similar shares.

“We’re seeing a shift towards more sophisticated PPA structures,” states Dan Eager, Research Director, European Power & Renewables at Wood Mackenzie.

New contract structures and hybrid models gain momentum

As the market matures, innovative contractual structures are emerging, often combining technologies to navigate market challenges such as negative pricing.

One standout trend is the rise of co-located renewables and battery storage, providing a strategic response to curtailment risks.

“While still a small part of the overall market, hybrid storage arrangements are gaining traction, particularly among energy-intensive industries and data centres seeking 24/7 energy matching,” explains Eager.

These contracts not only enhance supply reliability but also increase project competitiveness amid growing market volatility.

Corporate dominance and tech-sector demand

Corporate PPAs remained the dominant force, accounting for over 70% of the European market in 2024, as businesses intensify efforts to decarbonise operations.

“The technology and data sectors were the primary drivers of offtake activity,” notes Eager. “These power-intensive businesses are increasingly relying on PPAs to sustain their future operations and meet sustainability goals.”

At the same time, route-to-market PPAs solidified their role as the second most prominent deal type, reflecting a diversification in buyer profiles.

Pricing dynamics and outlook to 2026

Wood Mackenzie’s report highlights a complex pricing environment entering 2025, shaped by curtailment risks, negative pricing periods, and evolving retail rates.

“Our analysis shows that Iberian markets offer particularly appealing conditions for both solar PV and onshore wind PPAs,” Eager explains.

Looking ahead to 2026, the firm’s fair value outlook identifies continued opportunities for competitive PPA arrangements, especially for mature technologies such as solar PV and select onshore wind markets. The report also anticipates the emergence of hydrogen-linked PPAs, pending regulatory clarity.

“Our wholesale market modelling indicates that capture rates are set to decrease over the next five to seven years,” Eager forecasts. “Renewable supply will outpace demand growth, placing pressure on market flexibility.”

This dynamic is expected to bring greater price volatility and shift how pay-as-nominated PPA prices are calculated, particularly in the risk premium components.

“While market conditions vary, our fundamentals-based forecasting indicates that there are still opportunities for mutually beneficial PPA deals,” Eager concludes. “The key will be navigating the complexities of each market and technology to find the right fit for both developers and offtakers.”

Renewables reached 47% of the EU power mix in 2024

This surge in PPAs aligns with a broader structural shift in Europe’s electricity landscape. According to Strategic Perspectives, renewables accounted for 47% of the EU’s electricity mix in 2024, highlighting sustained momentum in the energy transition.

This milestone was driven by record performances in solar and wind, as well as ongoing declines in coal and gas-fired generation. Countries such as Germany, Spain, and the Netherlands saw the highest integration rates.

This context further underscores the need for flexible and adaptive PPA structures capable of responding to price fluctuations, seasonal generation patterns, and evolving corporate energy needs.