LevelTen Energy’s Q1 European PPA Price Index Report, which is now available for subscribers, showed a stabilisation of solar and wind power purchase agreement (PPA) prices in Q1 of 2025.
Solar Prices Largely Flat in Q1
In Q1 2025, P25 solar prices on LevelTen Energy's Market-Averaged Continental Index exhibited a flat trend in price movements, with prices rising by only 1%. This marks the third consecutive quarter of solar PPA prices remaining in a consistent range, providing a strong indication that Europe's solar sector has fully regained its footing and has entered a chapter of improved certainty.
Europe's mainstay solar markets, like Spain, Italy, and Germany, continue to host a robust number of compelling PPA offers. But once-nascent PV markets have also continued to establish themselves, like Poland, Romania, and Finland. Polish solar development has grown in recent quarters, providing increased competition and applying some downward pressure on solar PPA prices there. And Irish solar offers appeared for the second time on our PPA Price Index, showing solar developers there are building PV pipelines that may be able to help support the power needs of the country's fast-growing data centre industry.
Pricing Stability for Wind Prices
European wind prices held stable in Q1, also increasing by a mere 1%. Europe's wind sector has navigated an abundance of headwinds in recent years, making this steady pricing trend an encouraging sign that the industry is now operating in far-more-certain waters. However, land availability and permitting headwinds remain persistent obstacles in many markets.
Spanish wind offers have continued to grow more attractive for PPA buyers in the country seeking to diversify solar-heavy portfolios and protect against growing concerns around price cannibalization in Spain's PV sector. France and Poland are also pushing forward plans to expand their offshore wind segments, with government auctions providing support. In time, these growing offshore markets will likely come to provide capacity for corporate buyers as well, as has been the case in other European offshore markets. Undoubtedly, demand will be high for production volumes from these assets that offer compelling capacity factors and production profiles.
Politician Uncertainty Remains
The last few months have witnessed a period of challenging political developments on the international stage for Europe. As the US and EU have enacted and rescinded various tariffs on one another, economic uncertainty has escalated. While the direct PPA market impacts are not yet clear, such trade disputes could harm economic growth and add uncertainty for corporate bottom-lines.
The new EU Commission has started its work by continuing to implement measures designed to advance the bloc's decarbonization ambitions. This includes February's Affordable Energy Action Plan, which contains provisions to increase energy market hedging options, support the continuation of efforts to streamline permitting procedures for energy projects, and encourage market mechanisms designed to promote flexible consumption. The Commission also stated its intentions to publish a "grid package" in 2026. The Act is a part of the EU's Clean Industrial Deal, which aims to support the development of clean energy technologies.
Stable Prices Mean It's Time to Procure
Europe's PPA market has experienced a dynamic pricing landscape over the past several years, with the energy crunch elevating prices to historic highs. In 2023, prices began trending downward as electricity markets normalised, a period in which many PPA buyers adopted a "wait and see" approach as they sought to understand when PPA prices would truly stabilise.
Q1's PPA Price Index provides compelling evidence that Europe's PPA market has achieved the stability counterparties have been yearning for. With Q1's Market-Averaged Continental Index PPA price resting almost exactly where it did three quarters ago, pricing stability is undoubtedly here. Buyers are highly encouraged to initiate procurements soon, allowing them to maximise their likelihood of securing capacity from deals that meet their price-hedging and sustainability needs. With the coast finally clear, demand for PPAs will no doubt be on the rise.
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