PPA market could achieve supply-demand balance by 2030, study notes

The country’s PPA market is greatly imbalanced as numerous investors behind a large number of RES projects are keen to establish power purchase agreements, promising priority status for their licenses as well as favorable borrowing terms, but, on the other hand, the number of interested customers, major industrial consumers, willing to purchase power through PPAs is limited, a study by Aurora Energy Research has shown.

This imbalance, in which supply of green-energy PPAs exceeds demand, is significantly reducing PPA prices to levels well below those reflecting the actual cost of such agreements, according to the Aurora study, whose findings were presented at the recent 4th Power & Gas Forum in Athens by Evaggelos Gazis, Aurora’s Head of South Eastern Europe.

The study found that the fundamental fair value of typical fixed-price PPA contracts in 2025 could range between 60 and 100 euros per MWh.

A fair value for a 7-year PPA starting in 2025 is over 70 euros per MWh for solar and over 80 euros per MWh for onshore wind, the Aurora study determined.

Though supply for PPA contracts is currently much higher that demand, increased demand from utilities and aggregators could balance the market by 2030, the study noted.

The fair market value of a PPA depends on the asset’s capture price, the value of risk and hedge as well balancing cost and value of Guarantees of Origin (GO) certificates, the study pointed out.