Spanish solar power purchase agreement prices fall to 30.93 euros

According to the latest data from LevelTen Energy, the average price of solar power purchase agreements (PPAs) in Europe rose by 0.4% in the second and third quarters of 2026, while the US market saw a 4.9% increase.

LevelTen attributed the price increase in the European market to macroeconomic factors, including rising solar module prices and higher interest rates. The rising costs are pushing up project development expenditures, forcing a slight upward adjustment in PPA prices to maintain the financial viability of projects.

The consulting firm also adjusted its data presentation method. It no longer reports prices directly in euros per megawatt-hour, but instead uses an index based on prices from eight quarters ago, with the reference period set at 1.00.

Under this methodology, the European solar PPA price index for the third quarter of 2026 was 0.86, equivalent to 86% of the price in the third quarter of 2024, when the average price was as high as 63.64 euros per megawatt-hour. The wind PPA index was 0.99, indicating that the decline in wind power prices over the same two-year period was much smaller.

Therefore, the price increase in this quarter is not sufficient to offset the cumulative decline in solar PPA prices since 2024. The data reflect more of a recent stabilization trend following a previous period of significant decline.

Hybrid power purchase agreements are gaining increasing popularity

Power purchase agreements (PPAs) that combine renewable energy generation with battery energy storage systems (BESS) are gaining increasing attention across Europe. According to a report by LevelTen, hybrid PPAs emerged in nine European markets during the third quarter, with Spain and Portugal accounting for nearly half of all such contracts in the region.

In Spain, the average price for standalone solar PPAs fell to 30.93 euros per megawatt-hour, a 1.2% decrease quarter-on-quarter and a 7.7% decline year-on-year. LevelTen noted that current prices are approaching the lower limit at which projects can still secure financing.

In contrast, the average price for hybrid PPAs in Spain reached 48 euros per megawatt-hour. This price differential reflects the additional value provided by energy storage: by shifting a portion of generation to other time periods, it reduces exposure during low-price hours and mitigates the economic impact of renewable energy curtailment.

Trends in hybrid PPA prices across Europe have been inconsistent. In Spain, such prices rose 6.8% quarter-on-quarter, while in Germany they fell 12.7%. The addition of energy storage alone does not eliminate volatility in PPA prices; the final outcome remains dependent on specific market conditions.

In Spain, the growing issue of renewable energy curtailment is a significant factor. In the first half of 2026, curtailment reached 2.5 terawatt-hours, more than triple the level in the same period of 2025, and 50% higher than the total curtailment recorded for the entire year of 2024.

Against this backdrop, integrating battery energy storage systems into renewable energy projects and their associated PPAs is emerging as a pathway to enhance generation flexibility and reduce exposure during periods of oversupply.

Operational assets attract more attention

LevelTen’s report for the first time includes data on power purchase agreements (PPAs) linked to operational assets, presented alongside contracts for new projects. Currently, agreements involving operational facilities account for approximately 40% of the total transactions recorded on the platform.

This trend is also evident on the bidding side: the share of PPAs associated with operational assets has risen from less than 10% to nearly 40% in the third quarter of 2026.

Operational assets carry lower development risk because they avoid many uncertainties related to permitting, construction, and grid connection delays.

They also offer buyers a faster route to integrating renewable electricity into their portfolios. This is particularly attractive to buyers who prioritize the availability and price of power supply over additionality—the contribution of new projects to increasing renewable energy supply.

Consequently, the European PPA market is transitioning from a period of deep price declines to a phase shaped by rising development costs, pressure on independent projects, and deeper integration of energy storage. In Spain—a market where solar PPA prices are among the lowest in Europe and renewable energy curtailment continues to increase—the hybridization of battery energy storage systems is playing an increasingly important role in the economic analysis of new projects.