LevelTen Energy’s Q1 2026 European PPA Price Index Report is now available for subscribers. Highlights of this quarter’s report include:
1. Solar prices decline again in Q1
Solar PPA prices declined again on LevelTen’s Market-Averaged Continental Index during Q1 2026, dropping by 4% and marking four consecutive quarters of price reductions across the continent. Year over year, European P25 solar PPA prices have gone down by approximately 13%.
2025 was a slow year for the PPA market in Europe, and Q1 brought more of the same as demand for renewable PPAs remained tepid amid a challenging market. Negative prices and solar price cannibalisation are making buyers wary, and development continues to go hybrid across many European geographies. Adding storage significantly improves project economics, particularly for solar, and the proliferation of battery assets across the grid should help to ameliorate some of these market challenges over time. Buyers are still signing deals for standalone solar assets, but are adopting a more diverse array of contractual arrangements to address concerns around negative settlements.
2. Wind prices hold steady in Q1
P25 wind PPA prices declined by less than 1% in Q1 2026. Wind projects provide buyers with attractive alternatives to solar contracts in markets where PV project economics continue to be plagued by negative prices and price cannibalisation. Moreover, wind’s high capacity factor and broader generation profiles compared to solar make wind deals a compelling addition to solar-heavy PPA portfolios. Tech companies looking to power data centres, which bring demanding consumption profiles, are pursuing available wind capacity with focus.
Wind development is also undergoing some degree of hybridisation, notably in Northern markets such as Finland, helping assuage concerns around curtailment and cannibalisation there.
3. Energy shocks complicate Europe’s energy future
Europe’s energy market is navigating its second crisis of the last five years as conflict spreads across Iran and other Middle Eastern nations. With a significant number of Gulf- region energy facilities being destroyed and the closure of the Strait of Hormuz, the global energy shocks have been substantial. According to London Stock Exchange data, Europe’s benchmark price for natural gas increased by more than 100% in the first few weeks of March as LNG exports from Qatar ceased entirely. While it is uncertain how long the conflict will last, the harsh impacts of damaged energy infrastructure will likely endure for months, if not years, and policy- based fixes are limited.
The conflict is underscoring the significant risks of fossil fuel dependency, with Spain — where the influence of gas on wholesale power prices is more limited — weathering the storm far better than countries like Germany, where gas plays a stronger role. For many nations, the conflict has heightened the urgency of shifting away from fossil fuel imports and moving more swiftly to renewable-powered energy systems.
4. Buyers can bolster competitiveness with PPAs
Europe’s corporate sector has endured substantial headwinds over the last year, with US-driven tariff exchanges driving costs up materially. Now, as the war in Iran chokes off fuel imports and pushes up electricity costs, buyers may begin viewing the hedging value of renewable PPAs with renewed focus.
As Europe’s urgency around decarbonisation resurges, buyers are in a strong position to procure in a PPA landscape that has seen prices drop consistently. PPA counterparties have a number of tools at their disposal to mitigate concerns around adverse market phenomena, including contracting structures that go beyond traditional, pay- as-produced deals. And, as hybrid project development increases, buyers can leverage the value-boosting benefits of storage to secure compelling contracts that can help them stabilise their energy input costs and further sustainability goals during a period of substantial uncertainty.