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European PPA prices stabilize in Q2 on reduced deal activity: Zeigo


UK PPA prices on slight downward trend

Polish prices breach Eur50/MWh mark

'Optionality to be had' in 10-yr PPAs

  • Author
  • Henry Edwardes-Evans
  • Editor
  • Debiprasad Nayak
  • Commodity
  • Agriculture Electric Power LNG Natural Gas

London — The impact of COVID-19 on the overall economy dampened the appetite for power purchase agreements in the second quarter of 2020, according to renewable energy data platform Zeigo.

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PPA prices from developers have remained static as the industry assesses the medium to long term impact of the crisis, Zeigo energy analyst Matthieu Paturet said July 21.

"A handful of corporate PPA signings have been reported since March although most companies have said they remain committed to sustainability targets," said Paturet.

In wholesale electricity markets, prices are recovering as demand begins to rebound in most of Europe following the easing of government restrictions.

"Offer prices have remained mostly stable across the continent in the last months as the industry remains in a waiting period while demand begins to recover," Paturet said.

This report investigates PPA price trends and general market conditions for the main established and emerging PPA markets in Europe.

The price data, supplied by Zeigo, reflects an average of what developers of renewable energy facilities are seeking in order to proceed to project financing.

Country updates: UK

PPA prices in the UK are on a slight downward trend with little overall activity in the area of corporate PPAs.

Prices had climbed above GBP52/MWh in February ahead of the lockdown, but were back down to GBP48/MWh in June - roughly where they were last August.

In terms of publicly announced agreements, Nestle UK has signed 15-year PPA with Orsted for 125 GWh annually, enough to cover 50% of its consumption from power supplied by the Race Bank offshore wind farm.

In addition, Statkraft has extended its existing PPA with biomass plant Sleaford in Lincolnshire, which is now set to expire in 2034.


Prices hovered around the Eur43/MWh mark in the second quarter of 2020 in Spain while a good number of deals were announced in the last few months.

A virtual PPA was signed between German developer wpd and drinks packaging supplier Ball Corporation.

The deal is for roughly 100 GWh of annual output and comes from wpd's array of wind farms in the Torozos plateau in north western Spain. In June, there was continued action in the Spanish market with three noteworthy PPAs signed last month.

A 10-year deal was agreed between Acciona and telecommunications company Telefonica. Statkraft was once again involved in a deal with Sonnedix for 50 MW of solar. Finally, Iberdrola has found support for 49 MW of new wind via a PPA with Vodafone.


Continued growth in the number of Polish projects registered on the Zeigo platform led to prices reaching Eur52/MWh in June - having dipped below Eur46/MWh in April.

Developer wpd was involved with a PPA deal agreed with the Polish branch of telecommunications company Orange. The deal was for 15 MW of wind power with the capacity due to be operational in 2021.

Window of opportunity

"Now is a great time to negotiate a PPA," said Laurent Segalen, founder and managing partner at renewable energy platform Megawatt-X Ltd., and co-host of the Redefining Energy podcast.

"There is limited downside for three reasons," Segalen told S&P Global Platts.

"First, the hydro situation in the Nordics is a once-in-a-century event, when we get a dry year you will see prices rocket," he said.

Nordic spot and near curve power prices have been at historic lows for several weeks depressing power prices. Generators have been forced to run down hydro reservoir stocks to accommodate unprecedented snowmelt this summer. Stocks across Nordic reservoirs are now above 100 TWh weeks ahead of norms, with some years never reaching such levels.

"Second, when you look at the nuclear situation in France and in the UK, I think the writing is on the wall. Those plants are just getting older, they will require more and more maintenance. Overtime, they will produce less and less," he said.

"Third – the price of gas, with the TTF at Eur5/MWh – no producer is making money at that level, it's less than the $2/MMBtu. Just crossing the Atlantic and re-gas costs $3/MMBtu. Current price levels are unsustainable," Segalen said.

The average JKM LNG price for August stood at $2.164/MMBtu, versus $1.853/MMBtu for DES Northwest Europe, Platts data showed July 17.

To make a decent return, TTF prices needed to be in the euro teens per MWh, as reflected in futures contracts, he said. The TTF Winter 21 contracts was assessed by Platts at Eur14.87/MWh July 17.

"Take these conditions together and I'd say all the bad news are in the market, so going forward either things will stay as today or you can witness significant upside," he said.

As such, the amount of optionality available today was huge for those looking to sign a 10-year PPA.

"Maybe that optionality will come in year 2, 3 or 5, but the upside is really attractive right now. I'm not saying you can hedge 100% of your portfolio this way, but you can hedge a decent amount, 20% or 25% of your future needs. The time is now," he said.