The European renewables power purchase agreement (PPA) market is likely to exceed 10GW in 2021, according to data from software outfit Pexapark.
Nearly 9GW of PPA deals were signed in 2020, despite an increase in price volatility due to lockdowns in the pandemic.
Pexapark’s data found Spain led the market due to favourable prices, with 3.4GW of renewable energy PPAs signed in the region over the past year.
A record volume of corporate PPA deals was also signed in 2020 by a sell-side dominated by 30 companies, including Iberdrola, Lightsource BP, RWE, Orsted and WPD.
Spain is set to be a leading market in terms of volume in the coming year, thought it will likely be challenged by the nascent German PPA market which is expected to take off in 2021.
Additionally, as offshore wind developers plan for gigawatt-scale projects in the years ahead, 2021 will likely see first large deals for capacity coming online during 2023, said Pexapark.
The large volume of power involved in these deals is likely to drive further consolidation of players in the market with access to sufficient capital, it stated.
Based on Pexapark’s price data and insight into ongoing deal activity, a number of trends are expected for PPAs signed across European markets in 2021.
Pexapark also forecasts continued challenges around price and volatility, particularly in markets with a high volume of projects built due to initially favourable prices, without a matching increase in demand.
For example, record-low prices in Sweden and Norway due to the cannibalisation effect are likely to render financing for future projects non-viable without significant decreases in cost of turbine technology or advances in storage.