As Q2 2025 comes to an end, we take a detailed look at H1 2025 PPA & BESS activity. What are the drivers behind decreased PPA volumes? This is our cut of the five main trends that are shaping the story of H1 2025 so far.
1. PPA Activity Down More Than 25% Year-on-Year, But Not Everywhere – And Not Necessarily Due to Solar!
Q2 saw around 3 GW of disclosed contracted capacity across 50 deals. Quarter-to-quarter, volumes moved sideways, whereas deal count decreased by 32%. In total, H1 2025 saw around 6.08 GW of renewable capacity contracted under PPAs across 124 deals – a year-on-year decrease of 26% in volumes (H1 2024: 8,25 GW) and 31% in deal count (H1 2024: 180 deals). Interestingly, the average deal size in H1 2025 stands at 48.2 MW – around 5% higher compared to the equivalent in 2024.
The main technologies of the first half of 2025 have been solar (4,2 GW|73 deals), onshore wind (1,4 GW|32 deals), mixed-technology (290 MW|9 deals) and offshore wind (134 MW|4 deals). The technology balance is proportionate to what the picture looked like in H1 2024.
Despite concerns over saturation of demand for standalone solar, volumes haven’t faced a decrease yet. H1 2025 saw 4,2 GW of solar capacity contracted under PPAs– a slight increase year-on-year compared to the 3,9 GW in H1 2024. Deal count is lower (73 in lieu of 95 last year), but in line with the overall trend. A key observation is the decrease in Mixed-technology PPA volumes. Offshore wind also experienced a further decline from the already low volumes recorded in H1 2024, from 543 MW and 14 in H1 2024, to 138 MW across four PPAs this year.
Solar offtake activity in H1 2025 reveals a clear split in market momentum. Solar offtake activity is slowing down in markets where cannibalization has worsened drastically and rapidly – such as Germany and France. In fact, Germany saw the largest decline in volumes – a remarkable 84% year-on-year decrease in terms of overall volumes, with 228 MW across eight deals in H1 2025 in lieu of a frenetic 1.2 GW across 31 deals in last year’s equivalent.
Still, volume losses in Germany and France were countered by increased solar activity in Italy and Spain. These numbers support the hypothesis that there is stable, or even upward appetite in markets which have had time to adjust to cannibalization and the lower valuation of solar production – i.e., Spain, or cannibalization levels are still very low – such as Italy. Italy’s solar PPA volumes grew 184% year-on-year, with nearly an additional 700 MW procured compared to the same period last year. Corporate appetite in the country is growing, and so is deal size – with a 420 MW solar corporate deal announced in June comprising the country’s largest PPA ever recorded.
When it comes to onshore wind volumes, Finland experienced the biggest increase. Amazon’s onshore wind spree contributed to the country seeing the largest YOY growth overall. In H1 2025, Finland saw 544 MW of activity across five deals – a 423% increase in volumes compared to H1 2024. Sweden, an almost exclusively onshore wind market, experienced the most drastic decline in volumes – a move that doesn’t come as a surprise as the country saw the most hours of negative prices.
2. Traders Capitalize on Market Risks as Corporate Buyers Hesitate
H1 2025 saw a clear slowdown of corporate activity, with around 4,3 GW of disclosed corporate volumes – more than 40% down YOY (H1 2024: 7,2 GW), across 94 deals. Meanwhile, there’s been a clear and steady recovery of utility PPA activity. Specifically, H1 2025 saw a doubling of disclosed utility PPA volumes (1,8 GW across 28 PPA deals) up from 900 MW across 12 deals year-on-year.
There are a number of factors that are holding back corporate procurement currently:
- The emergence of negative prices and buyers’ reluctance to assume part of this risk
- Limited understanding of future cannibalization effects and uncertainty on how to price this effectively
- Mismatch between solar production profiles and consumption patterns, and the fact that baseload structures – which would be more closely aligned with corporate consumption patterns – are lacking in the market
Meanwhile, traders and utilities – whose business is managing risk – are increasingly willing to take positions on future market developments and capture the upside. As BESS offer a natural hedge against solar capture risks, and utilities accelerate efforts to build BESS into their portfolios, market players are more inclined to expand their renewables exposure and integrate solar volumes.
In a market increasingly driven by flexibility monetization, today’s challenges—cannibalization, future capture dynamics and balancing risks—are becoming opportunities for those with the right profile. And with corporate buyers more hesitant to pay premiums for solar, transactable prices are—perhaps for the first time in a while—closer to perceived fair value. This better aligns with buyers’ risk-adjusted views of contract value, supporting traders’ and utilities’ opportunistic procurement strategies. In short, the price is right.
What remains unchanged: first-time buyers continue to enter the market at a steady pace—both corporates and utilities. In H1 2025, 11 utilities made their debut in the PPA market, with around 313 MW in disclosed contracted volumes. Examples include Flower, Trafigura and Plenitude. On the corporate side, 53 first-time buyers entered the market, contracting roughly 2 GW. Notable names include Autoliv, TfL, Swiss Federal Railways (SBB), Stellantis.
3. Negative Price Hour Events En Route to Surpass Last Year’s Levels, With Lack of Consensus on How to Price the Risk
The theme of negative pricing hours across European markets continued strong in H1 2025. According to Pexapark’s data analysis, Sweden has maintained its top position for the market with the most such events (across all pricing zones at similar levels). The same applies to the remaining jurisdictions that make up the top five in Europe, which have remained the same since 2024. On average, European countries have reached around 67% of last year’s number of events. Norway has reached 90%, Denmark 87% and Spain 86%, suggesting that this year will see last year’s records tumble.
Overall, negative price hours are leading to decreasing capture rates and greater pricing uncertainty for PPAs, with large differentials in PPA prices depending on how this risk is allocated between buyer and sellers (and depending on how parties expect this risk to develop in the coming years). A price consensus is only slowly starting to form on how to manage and price negative price risk in a contract. A notable trend is that solar risk discounts appear to be steeper.
4. Price vs. Value – Are PPAs Overpriced?
In opaque renewable energy offtake agreements — such as long-term PPAs for solar and wind, or tolling agreements for BESS — price does not always reflect true (risk-adjusted) value. As Warren Buffett famously said: “Price is what you pay. Value is what you get.” This distinction has become especially relevant in recent PPA transactions, where many transactions have occurred above what would be considered fair market value. These deals for new-build projects often included a “green premium” to reflect additionality, with corporates driving much of the demand.
The most pronounced PPA activity has now taken place in markets where transactable prices — the levels at which buyers and sellers can reach an agreement — have incorporated significant green premiums. In such cases, utilities have often been priced out of the market. For instance, in France, Pexapark reported that transactable prices exceeded what they considered a fair, risk-adjusted value for a 15-year solar Pay-as-Produced PPA starting in 2027 by as much as 15 EUR/MWh.
In today’s environment, two clear trends are emerging.
First, transactable price ranges are narrowing. According to Pexapark’s polling data, the overlap between the highest bids from buyers and the lowest offers from sellers is shrinking. This narrowing suggests a lack of consensus on pricing and reflects more cautious market behaviour. When price ranges are wide, buyer and seller expectations are generally aligned. When they are narrow, agreements become harder to reach.
Second, transactable prices are moving closer to what market professionals view as fair value. Corporates are re-evaluating their procurement budgets and their willingness to pay green premiums. As this recalibration unfolds, the PPA market appears to be entering a more disciplined phase – one where PPA pricing more accurately reflects underlying value and risk.
5. BESS Deal Flow Takes Off as a New Market Emerges
The maturity of the BESS industry is clearly reflected in deal count and contracted volumes over the past 18 months, with the trend increasingly pronounced in 2025 so far. The foundations that were laid over the past eight years – centered around project development, refining and evolving business models, and regulators playing catch-up at different pace across Europe – are now resulting in compounded growth and activity.
In total, H1 2025 saw 4,6 GW/9,2 GWh of BESS capacity being contracted under optimization or fixed revenue offtake contracts (e.g. floors, tolls) across 36 deals. The values reveal a mammoth increase of activity, already more than triple the offtake volumes of the entire 2024 (1,6 GW/3 GWh) and deal flow having surpassed 2024’s entire deal count by 44%.
This rapid growth was driven by a wave of new agreements in the two most advanced markets – Great Britain and Germany – alongside first-ever BESS deals emerging in Belgium, Poland, Greece, and Bulgaria.
The lion’s share of deal flow concerns 2h BESS assets, with signs of activity involving 3h and 4h assets. Larger-scale assets increasingly embark on bankable fixed-payment structures such as tolls and floors. H1 2025 saw four tolls for more than 200 MW and 1 GW of floors across two deals.
At the same time, asset owners have shown a growing appetite for fully merchant structures, typically offered by specialized algorithmic traders. Merchant deal capacity reached nearly 2.5 GW in H1 2025, up from just 410 MW in 2024. Portfolio-level deal capacity accounted for 3 GW in H1 2025, a practice gaining traction as bundling assets offers a more diversified risk profile that is suitable for lenders.
Outlook
The corporate PPA market is undergoing a transition and the era of ‘green at any cost’ appears over for now. In the near term, the European PPA market is likely to continue experiencing more selective activity, but with more innovative structures and increased integration of BESS solutions.
Utilities are returning to the market playing to their core strengths — pricing and managing risks— seizing opportunities when market prices align with perceived value. Meanwhile, BESS is broadening the range of possibilities
Markets that had more time to adapt are showing greater resilience, suggesting this may be an adjustment phase, not the beginning of a doom and gloom. H2 2025 definitely looks like one to watch!