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Market Volatility in 2021 Leads to Fundamental Changes for Renewable Energy PPAs – Report

2 min read

• Q4 energy price surge led to volatility spikes of up to 250% – five times higher than normal – causing utilities to reassess long-term PPA strategies

• Price impact of market turmoil is negatively impacting the the viability of the long-term PPA market; utilities and corporates would benefit from each other to expand the long-term PPA market offering..

• Trends are poinitingto a new era of inreases exposure to price risk with renewable investors managing their exposure with short-term PPAs, pushing them to upgrade their operating models.

Zurich, February 10, 2022 – Energy market turmoil in the fourth quarter of 2021 is leading to fundamental changes in the renewable energy Power Purchase Agreement (PPA) market. That is according to the ‘European PPA Market Outlook 2022’ report published today by Pexapark, a leader in software and advisory services for renewable energy sales.

In a year where volatility – driven by surging gas prices – spiked five times higher than usual, PPA activity in renewable energy grew 58 per cent, with December 2021 witnessing the largest PPA activity ever, volume-wise.

The annual report predicts that lasting impacts of the recent market turmoil, particularly in maturing markets, will test the availability and pricing for long-term PPAs of 10 years or more. This market uncertainty will herald in the era of the short-term PPA and new baseload structures. It will also drive the rise of the ‘next generation utilities’, pushing investors to upgrade their operating models to comprise origination teams, portfolio management capabilities and risk management infrastructure.

Annualised volatilities of front year contracts, a key driver in PPA pricing, reached realised volatility levels of up to 250% last year – five times the level of usual spikes.

And as prices began to rise in September, PPA activity nosedived in October, with the closing of merely 125MW of PPAs across three deals. This indicated that the merchant market actually prefers more moderate changes in price for long-term PPAs.

Despite the circumstances, activity rallied through December, with an impressive 3.2GW of PPAs signed over 21 PPAs. Last year also saw corporates secure a greater number of PPAs than utilities, with the high-price volatility creating a more disadvantageous pricing situation for utilities. In total, 2021 saw 6.5GW of disclosed contracted capacity for corporate PPAs, and 4.6GW for utility PPAs. Amazon was the biggest PPA offtaker, responsible for 16% of the year’s contracted capacity and 30 per cent of European corporate PPAs overall.*

This is a trend that is likely to continue through 2022, according to Pexapark’s Market Outlook, with the rise of the “mega buyer” offtake segment. Corporates such as global data centre behemoths, chemical companies and consumers planning power conversion facilities, such as green hydrogen, have gargantuan energy needs. Such needs are likely to be sourced from offshore wind farms, alongside equity investment, as pioneered by the one-of-a-kind deal between chemicals company BASF and Vattenfall.

Luca Pedretti, Chief Operating Officer, Pexapark, said: “The findings of our 2022 Market Outlook strongly indicate that operating models for renewable energy sales and risk management are going to be needed to keep pace with the impact that volatility is having on the market.

“We have seen that an increase in discounts of Pay-as-Produced (PAP) PPAs has triggered rising demand for shorter term and  Baseload PPAs. Such volume structure not only brings a steep shift from the typical risk profile used for traditional renewables investment, but also in the day-to-day operating model of the asset. In many markets, changes in daily capture price and lower than expected production volumes led to cash outflows and losses in markets . Sustained and continuous high volatility of capture rates highlights the need for more active management of asset revenues

“In response, renewable energy funds and investors are building what we see as the next generation utilities. Such players will aim at building similar skills in risk management as typical trading houses tocapture the gains of actively managing their exposure to price risk. We predict that investment managed actively with shorter-term PPs could overshadow the existing long-term PPA market in terms of volume.”

“This years PPA market trends shows,” adds Pedretti, “that a more active approach  to managing risk is becoming critical.. And PPAs alone are not enough –from Sweden to Romania, Germany to Poland, renewables investors are increasingly going to need to ensure they have operating systems which empower them along the deal life cycle to manage pricing, analytics, execution and monitoring of price risk emanating from renewable investments.

To download Pexapark’s European PPA Market Outlook 2022, please visit:




Notes to Editors:

*Pexapark has updated its PPA Tracker methodology and now only includes deals that meet certain criteria. Above all, a PPA needs to carry price risk (offering a fixed-price or similar pricing structures per MWh). The most critical impact of our new methodology is that we do not include PPAs that act as route-to-market/balancing arrangements (such as for projects under the UK CfD scheme that may need PPAs to market their power, while it’s the UK government that takes the price risk by offering a floor price), many of which have been heavily publicised.


About Pexapark

Pexapark is an award-winning enterprise software and advisory company, specialised in renewable energy. With more than 20,000 MW of renewable PPA transactions supported, Pexapark is the reference for buying, selling and managing renewable energy.

Pexapark’s PPA reference prices increase transparency across 18 markets. Our advisory team and software suite enable leading companies to close successful PPA transactions, manage their risk, and grow their renewable energy revenues.

Pexapark was founded in 2017 with the purpose of accelerating the energy transition towards net-zero by creating an efficient market for renewable energy.

For more information, please visit, or get in touch with us at


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