European PPA volumes could double in 2020

More than 15GW of power purchase agreement (PPA) deals could be signed in Europe in 2020, which would be almost double compared with last year, delegates heard at the Solar Finance & Investment Europe conference in London this week.

A total of 61 major PPA transactions making up nearly 7.8GW of renewable power were reported last year, with a strong start to 2020 indicating this year could register a new record volume in the region, Swiss PPA firm Pexapark chief operating officer and co-founder Luca Pedretti said at the event.

"Volumes so far in 2020 have been mind-blowing," Pedretti said, adding that corporate PPAs (CPPAs) signed in January may have already surpassed total figures for 2019.

CPPAs — deals between power generators and final consumers — totalled 2.6GW in Europe last year, based on combined figures from Pexapark and Bloomberg New Energy Finance, while up to 2.7GW was seen in January 2020 alone. Figures for this year include 1.1GW of publicly announced agreements and 1.6GW of negotiations in various online PPA platforms, including Pexapark's own service, Pedretti said.

The 15GW estimate for 2020 includes both CPPAs and the so-called "utility PPAs" — deals between power generators and utilities, which have been Europe's main type of transaction in past years.

Major European utilities such as Centrica, Axpo, Statkraft, Vattenfall and Alpiq have been leading deal volumes in the region. But more recent trends include German utilities and London-based trading firms signing transactions in markets such as Spain and Scandinavia.

While Iberian and Nordic countries are expected to continue holding large shares of reported volumes this year, markets such as Germany and Italy are forecast to register sizable deal flows for the first time, Pedretti pointed out.

Another market trend is the increasing number of pure merchant projects being developed across Europe, although volumes remain small compared with subsidy-free projects backed by PPAs.

Spain is also one of Europe's key markets for fully merchant projects, but financing conditions have only recently started seeing increased flexibility, with a small pool of local banks closing finance deals with renewable developers.

By Juan Weik