BERLIN: Germany saw a steep decline in contracts between solar developers and corporate customers as plunging electricity prices undermine the viability of new investments.
Contracted volume under so-called power purchase agreements, or PPAs, fell to about 250 megawatts (MW) in the first half of the year, according to data from consultancy firms S&P Global Commodity Insights and Aurora Energy Research.
That’s down from 1,000MW in the same period of 2024.
That decline could threaten Germany’s climate targets, which require photovoltaic capacity to more than double by 2030.
“Solar parks over 20MW that don’t receive subsidies in Germany are hardly being built anymore as the market prices for PPAs are too low,” said Thomas Krings, managing director of Quadra Energy, which is part of TotalEnergies.
Profits at European solar parks have fallen to record lows, as a surge in new capacity – without adequate storage solutions – pushed electricity prices into negative territory.
In Germany, that’s happening mainly around midday, when high solar generation coincides with lower demand from consumers.
“This trend has been apparent for around a year, but has become even more pronounced with decreasing capture rates and the current record levels of negative electricity prices in May and June,” said Krings.
From 2027, a solar power project will only break even if it can sell electricity at around the mid-€50s per MWh under a 10-year contract, according to Bruno Brunetti, head of environmental markets and PPA analysis at S&P Global Commodity Insights.
But right now, the price in Germany is just €41.40 per MWh.
“This market price would challenge the profitability even for plants with particularly good solar radiation conditions,” said Brunetti.
The PPA model is also under increasing pressure as the level of climate ambition is scaled back, both globally and in Germany, said Casimir Lorenz, managing director for Central Europe at Aurora Energy Research.
Contracts for solar parks combined with batteries could be one way for developers to provide customers with greater flexibility, he said. — Bloomberg
