Decline In Renewable Power Purchase Agreements Signals Growing Risk To Europe’s Energy Security And Global Competitiveness
Source：solarquarter
Europe’s Power Purchase Agreement (PPA) market has witnessed a significant downturn in 2025, with the number of deals signed falling by 60% compared to last year and contracted capacity declining by 40%. This slowdown comes at a critical juncture, as the region’s path to energy security and competitiveness hinges on accelerating electrification and large-scale deployment of renewables like wind and solar.
Despite the urgent need, several structural bottlenecks are constraining progress. Europe’s grid and storage infrastructure are not expanding fast enough, with grid permitting delays emerging as a major obstacle—hundreds of gigawatts of renewable projects are currently awaiting connection. Meanwhile, permitting procedures for renewables remain sluggish, with 26 EU Member States found in breach of the Renewable Energy Directive for not implementing the prescribed permitting rules.
Electrification—central to achieving decarbonisation and cost efficiency—has also stagnated, leaving Europe trailing behind in its transition goals. Adding to the challenge, an increase in hours of negative electricity prices is complicating PPA negotiations, underscoring the urgent need for short-term storage solutions to balance supply and demand.
PPAs, however, remain critical for driving both decarbonisation and industrial competitiveness. They offer price stability to companies, enable financing for new renewable projects, and shield buyers from volatile energy markets. Recognising their importance, the European Commission has reinforced its commitment to PPAs through the revised State Aid framework under the Clean Industrial Deal (CISAF). This allows national governments to provide temporary electricity price relief to energy-intensive industries, contingent on investments in renewables, storage, or direct electrification—potentially via PPAs.
Further strengthening this effort, the European Investment Bank (EIB) has introduced a €500 million pilot programme to support corporate PPAs for mid-sized companies. Additionally, the European Commission has proposed “tripartite contracts” for offshore wind and hybrid solar-battery projects, enabling governments to act as third parties to share risks and reduce costs for both renewable producers and corporate offtakers.
While the current slowdown paints a concerning picture, Europe’s policy direction remains clear—PPAs are not merely compliance mechanisms but foundational tools for ensuring industrial resilience, energy independence, and climate neutrality. For Europe’s energy transition to succeed, unlocking grid capacity, accelerating permitting reforms, and advancing storage deployment will be vital to restoring momentum in the PPA market.