Solarpower Europe continues to see the European PPA market as an important marketing channel for solar power – but only as a supplement to tenders. In Germany, the volume of new corporate PPAs has recently fallen significantly.
The market for power purchase agreements for solar power in Germany has shrunk by 56 percent compared to the previous year. This emerges from the report “Auctions and corporate PPAs – Market Review 2025” by Solarpower Europe. A graphic in the report shows that the German PPA market was just over one gigawatt in 2024, while it will only reach just over 500 megawatts in 2025. Due to the graphical representation, the values can only be read approximately.
The industry association primarily attributes this to structural changes in electricity markets with a high proportion of renewable energies. As solar power production increases, situations arise more frequently in which the supply of electricity exceeds demand. This leads to falling market prices in sunny hours and makes it more difficult to calculate long-term electricity supply contracts. Increasing network bottlenecks and falling electricity prices in electricity systems with a higher proportion of renewable energies are making the economic viability of new PPA contracts more difficult. SolarPower Europe also points to an increasing number of hours with negative electricity prices in European electricity markets with a high proportion of renewable energy. The resulting increasing price volatility increases the risks for buyers and project developers when structuring PPAs.
Not all European markets are declining. In some countries the corporate PPA market has continued to grow. Italy was able to double its PPA volume compared to 2024 and will reach around one gigawatt in 2025. Poland recorded growth of around 33 percent, just under one gigawatt. The largest market remains Spain. Despite a slight decline of around seven percent, the volume of newly concluded solar PPAs there remained at just over two gigawatts.
The PPA market remains a supplement to the tender market
Despite the current weakness in individual markets, Solarpower Europe emphasizes that the European PPA market remains active. Power purchase agreements continue to be increasingly used by industrial companies to secure electricity prices in the long term and achieve decarbonization goals.
On the demand side, large technology companies continue to dominate the solar PPA market. After announcing around two gigawatts of PPA capacity last year, companies such as Amazon, Google and Microsoft remain the most important buyers of solar power via long-term power supply contracts, according to the report. The main driver is the rapidly increasing electricity demand of data centers.
At the same time, the transport sector is becoming increasingly important. National railway companies and automobile manufacturers have significantly expanded their procurement of solar power. With around 1.5 gigawatts of announced solar PPA capacity, the sector is becoming one of the most important drivers of private investment in renewable energy. Companies that have expanded their solar power procurement include SNCF, Renfe and Deutsche Bahn, as well as industrial companies such as Stellantis, Tesla and Brembo.
However, the association makes it clear that PPAs are not a replacement for government funding instruments. Rather, they function as a supplementary marketing channel alongside the tender market. For many solar projects, government auctions remain crucial to securing stable revenue streams and making investments bankable. Last year, 25.2 gigawatts of solar power were awarded through auctions and tenders in Europe, an increase of 23 percent compared to 2024. This represents a new record.
However, the proportion of tenders in total annual expansion has recently fallen. While 52 percent of newly installed solar power was awarded via auctions in 2021, this share was recently less than 40 percent. The indicator reached its lowest value in 2023 at just 22 percent, when the EU installed a total of 63.8 gigawatts of photovoltaics. According to the report, these fluctuations reflect several factors, including varying auction success rates, the development of the PPA market, temporarily attractive merchant business models and the strong growth of solar expansion in Europe.
Signature gaps show a need for adjustment
At the same time, the report points to increasing problems in the European tender market. Between 2021 and 2025, around half of the solar auctions in Europe left some of the tendered capacity unfilled. According to SolarPower Europe, such signing gaps often arise due to bid caps that are too low, unsuitable tender designs or complex administrative requirements.
The association sees this as a sign that many tender designs are no longer sufficiently adapted to current market conditions. Among other things, the association recommends more realistic bid caps that reflect the increased project and financing costs, as well as indexing the remuneration over the contract term to take inflation risks into account. In addition, member states should publish multi-year tender plans to give project developers and investors planning security. The integration of hybrid projects consisting of photovoltaics and battery storage in tender designs could also help to better address negative electricity prices and grid bottlenecks.
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