Length, size of European PPAs shrinking in 2021

Ludovico Gandolfi


LONDON (ICIS)–The average length and size of power purchase agreements (PPAs) signed in Europe has shrunk in 2021, according to data on publicly announced deals collected by ICIS.

In general, growth in Europe’s PPA market advanced at a steady pace this year, with 7.6GW of total volumes contracted in 2021 so far against an average of 7.2GW over the past five years.

The bulk of deals continued to be signed in established markets such as Sweden, Finland and Spain, but emerging PPA markets such as Poland and Lithuania also saw significant activity.

Impressive volumes were also achieved in the Netherlands this year, with over 1.1GW from the massive Hollandse Kust offshore wind farms secured by corporate customers under PPA deals.


The length of PPA deals has been steadily decreasing in past years as developers and utilities, which sell the output of renewable energy projects, got more accustomed to offering shorter and more flexible deal structures.

This trend might have been further boosted in 2021 by unique conditions in European wholesale power markets.

With extremely high and volatile power prices in past months, interest in shorter-term deals has increased, possibly as a way for renewable asset owners to lock in profits rapidly on contracts with greater value.

The average tenor of publicly announced European PPA deals in 2021 was just over 11 years. This same figure was 14 years in 2018 and 16.5 years in 2016, signalling a clear downward trend in PPA length.

The popularity of the 10-year PPA tenor in particular seems to have increased, with total volume contracted under a 10-year PPA reaching almost 2.5GW in 2021 so far, versus 2GW the previous year and 1.3GW in 2019.

Appetite for long-term deals might increase in the near future if off-takers believe energy commodity prices will remain on a bullish trajectory in coming years, attracting renewed interest in long-term price hedging.

The size of PPA deals also fell steadily in 2021, with contracted capacity averaging 83GW so far this year, versus 110MW on average in the past five years.


Onshore wind was the preferred technology for PPA deals in 2021 by far, making up almost half of total contracted capacity and increasing by over 60% year on year.

Onshore wind growth was mainly driven by Spain and Nordic markets including Finland and Sweden.

Finland and Sweden, which are traditionally low-priced markets for wind PPAs, attracted a combined 2.3GW of onshore wind PPAs in 2021 so far.

Buying interest from utilities and other suppliers in the Nordics has soared as a growing spread between PPA and wholesale prices makes PPAs increasingly attractive for suppliers.

Germany only saw modest growth in 2021 so far, with 67MW in onshore wind capacity signed under PPAs, a volume similar to those observed in past years.

The country is expected to grow as a PPA market for onshore wind due to many projects dropping out of subsidy schemes in coming years.

The launch of the 1.4GW NordLink interconnector between Germany and Norway in early 2021 could also see cross-border PPAs being signed between Germany and the Nordic markets in coming years.

Poland also contributed to onshore wind PPA growth, with a doubling of onshore wind capacity marketed through PPAs in 2021 compared with the previous year, reaching 213MW signed in total.


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