Germany Closes a Record Number of PPA Transactions
Germany’s renewable energy sector has closed a record number of PPA transactions throughout the first quarter of 2024, according to new Power Purchase Agreement (PPA) data from Pexapark, the trusted provider of reference prices and market intelligence for renewable energy.
According to Pexapark’s latest data, the German PPA market has maintained its record-breaking momentum throughout Q1 2024. 16 PPAs announced in the first quarter of 2024 representing 648 MW of capacity, the highest number of PPAs signed in the country in any quarter to date.
This follows a significant increase in publicly announced PPAs in 2023, which totaled 42 agreements and 3.7 GW of capacity, making Germany the second largest European PPA market after Spain, accounting for about 23% of Europe’s contracted capacity during that period.
Consistent Growth for PPAs throughout 2024
This high level of activity in Q1 2024 was followed by one of the largest Solar PPAs the German market has seen to date, announced in early April. The 12-year, 208 MW PPA signed by Encavis Asset Management with chemicals giant LyondellBasell covers 80% of the output of the 260 MW Bartow Solar PV project, ranking among the largest of its kind in Germany. Pexapark supported Encavis Asset Management as commercial advisor throughout the structuring and negotiation process of the PPA transaction.
Growth is being driven by increasing demand for renewable energy, particularly from corporate and industrial buyers. Sustainability targets and price hedging remain primary motivations for corporations, with many recognising the strategic advantage of locking in prices for the long term amid relatively decreased market prices.
Max von Hausen, Country Lead PPA Transactions – Germany, Pexapark, said: “Germany’s position as a leader in the renewable energy market remains strong, as evidenced by the steady influx of large PPA announcements. The LyondellBasell-Encavis agreement is one example of the growing confidence in the German post-subsidy renewables market and underscores its attractiveness for sustainable investment.”
With success comes further challenges
Amid this success, challenges do persist. Renewable energy developers and operators across Germany – as well in Solar – have faced a difficult environment since the latter half of 2023, characterised by decreasing power prices, increased financing costs and continuous high capital expenditure.
“To navigate these challenges and capitalise on the opportunities presented by the evolving market, developers and independent power producers (IPPs) must focus on offtake agreements with competitive PPA prices and well-balanced risk structures, while continuing to optimise development and financing processes,” Max added.
Having worked closely with Pexapark on one of Germany’s biggest PPAs, Elisabeth Rabe, Team Lead Investment Structuring, Encavis Asset Management AG, said, “Pexapark’s expertise has been instrumental in navigating the growing yet complex German renewable energy market. Together, with LyondellBasell, we have ensured that our recent deal was not only successful but also strategically advantageous for both businesses. It’s essential that corporates and suppliers seek the best intelligence and price references to secure competitive deals and drive sustainable investment.”
