Solar PPA Trends & Prices in Europe

“The European solar energy industry is back!” These words have been iterated repeatedly over the last two years, but have gotten louder and louder this year. With the resurgence of large-scale solar in the Iberian peninsula; the success of subsidy-free photovoltaic (PV) projects in the UK, Spain and Italy; and the emergence of solar power purchase agreements (PPAs) - there is little doubt that we are in the midst of a major metamorphosis of Europe’s solar energy market.  

PPA scene in Italy

Recently, the PPA model has slowly been taking over Italy’s solar energy landscape and has become one of the main drivers stimulating growth in the country’s large-scale PV segment. It has also resulted in many of the active players reselling their procured solar energy to large energy consumers through corporate PPAs, which is stimulating the development of a more long-term price index. So far, more than 500 MW of large-scale solar PPAs have been publicly announced in Italy, with many more awaiting final contract negotiations, especially in the rooftop and C&I segments. This surge in popularity has provided an increase in trust in this new mechanism, and has therefore created new opportunities for large energy consumers.

Deals made

The largest PPA signed to date, both in terms of capacity and duration, was signed in January 2019, by European Energy and Axpo, for a combined capacity of up to 300 MW.  Both parties have agreed to not disclose the exact details of the agreement, but have communicated that the agreement will cover more than 12 years, which is substantially longer than traditionally seen with these types of PPAs in Italy or elsewhere in Europe. Other off-takers that have taken a piece of the solar PPA cake are EGO Group (procuring 103 MW from Octopus), Shell (signing a 5-year PPA for 70.5 MW from Octopus), and Audax (contracting 20 MW from NGC for 10 years).


Despite the extensive pipeline of PPA projects, the market still faces some challenges with respect to this new way of doing business. The major hurdle for PPAs was commonly thought to be the issue of bankability on the off-taker’s side. However, this concept is more linked to the structure of the project and the PPA. It has been recently shown that PPA structures can enhance their bankability at different points beyond the rating of the off-taker by taking the price-level and structure, route-to-market considerations, contract optionality and collaterals’ package from the off-taker into account.


When it comes to private PPAs, the elephant in the room was always regarded to be the contract’s price. However, things have been changing lately, and those changes have been for the better. Since PPA prices are becoming more and more competitive, they are reaching a level where they can completely ensure the financial feasibility of many types of projects. The pay-as-produced structure, which was traditionally seen as more bankable, is starting to show some cracks, as investors have realized that it is not necessarily the most efficient PPA structure. As risk appetite increases, investors are starting to try out more “exotic” products, and even longer contract durations.

Moving forward

There are still many questions surrounding the topic of PPAs in Italy’s solar industry, as it has become the hottest point of discussion in Southern Europe. If you would like to know more about solar PPAs in Italy and how they fit in the European perspective, feel free to download the slides and recordings for the “Solar PPA Trends & Prices in Europe” webinar by clicking the “access recordings” button. The webinar was hosted by Solarplaza and organized as preparation for the Solar Market Parity Italy conference taking place in Milan on June 18, 2019.

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