European energy buy settlement (PPA) costs fell in February amid sliding vitality commodity costs, however deal circulate held regular, says Swiss vitality consultancy Pexapark, noting {that a} “landmark” 40-year, 15 MW photo voltaic PPA was signed in Wales.

March 25, 2025
Brian Publicover

European PPA costs declined in February, reflecting a broader downturn in vitality commodity costs, whereas transaction exercise held regular regardless of a lower in quantity, in accordance with Pexapark’s month-to-month PPA report for March 2025.

Nonetheless, the Swiss vitality analysis agency famous {that a} record-breaking 40-year photo voltaic PPA was signed in Wales final month. It additionally highlighted rising tendencies in battery vitality storage techniques (BESS) from the latest Vitality Storage Summit 2025 in London.

Pexapark’s EURO Composite, a benchmark for 10-year “pay-as-produced” PPA costs, closed February at €50.25 ($54.35)/MWh, down 4.3% from €52.53/MWh in January. The decline mirrored falling commodity costs, with Germany’s Cal26 energy contract sliding to €84.57/MWh and the Dutch TTF Cal26 fuel contract ending at €36.90/MWh, after peaking earlier within the month.

Delicate climate after a February chilly snap, mixed with bearish fuel market indicators, drove the decline, mentioned Pexapark. Portugal recorded the biggest PPA value decline at 10.9%, attributable to reference value recalibration, whereas Nordic costs rose 0.6%.

February PPA deal circulate hit 679.8 MW throughout 24 agreements, a 14% drop in quantity and 4% fewer offers than January, in accordance with the consultancy. In comparison with February 2024’s document 2,568 MW throughout 54 offers, this yr’s figures replicate a 73.5% capability decline. Notable offers included a 130 MW digital multi-buyer PPA in Spain between X-Elio and the Energize Program, a 98 MW multi-country photo voltaic PPA between BNZ and Kimberly-Clark, and a 57 MW photo voltaic PPA in Spain linking Zelestra and Tesla.

Pexapark singled out UK developer Innova’s 40-year, 15 MW photo voltaic PPA in Wales with Dŵr Cymru (Welsh Water) as a very notable deal, surpassing Europe’s earlier 30-year tenor document. The settlement, tied to the Wrexham and Cefn photo voltaic farms, marks a shift towards longer-term agreements, with development set for 2025.

“Now we have seen long-term PPAs in Europe ranging between 5 and 25 years, with the longest tenor recorded up to now being 30 years,” Pexapark famous, describing the Welsh PPA as a “landmark” deal.

The analysis agency quoted one asset proprietor at Vitality Storage Summit 2025 as saying that, not like in the USA, Europe rewards working photo voltaic and BESS property individually, with AC-coupled setups most popular for his or her flexibility. Nonetheless, valuation challenges persist, with one investor telling Pexapark that it may be tough to exactly worth co-location, “at the very least no more than standalone storage in a portfolio.” The discussions on the summit additionally reportedly targeted on tolling offers and financing innovation as key drivers of deployment, mentioned the corporate.

Pexapark additionally famous that Italy’s new Transitional FER X Decree, efficient Feb. 28, 2025, is poised to speed up renewable vitality progress by providing incentives for 10 GW of photo voltaic, 4 GW of wind, and extra capability for smaller hydro and biogas tasks by the tip of this yr.

It mentioned that February’s secure deal circulate for smaller volumes displays a maturing PPA market, whereas ongoing discussions within the BESS sector underscore how the business is adapting to new challenges and alternatives.

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