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Pace of signings cool in European market, manufacturers become prominent offtakers

By Yasiru Jayakody, Sales Analyst

The European PPA Market was more consistent across quarters this year, with manufacturing companies signing for a nearly equivalent amount of capacity compared to tech companies. Q1 saw 27 signings for 1.11 GW – less capacity than either of the previous two quarters. More than half of this was signed by the manufacturing sector, mostly as part of several large deals by INEOS and Borealis. Arla Foods signed a solar deal for 168 MW, while Nestlé signed eight small agreements totaling 77 MW of capacity.

European Offsite Renewable Energy Power Purchases by Sector

Source: BloombergNEF, Q3 2022 and Altenex Energy

Q2 saw a similar level of activity, with 25 signings for a total of more than 1.23 GW. Over two-thirds of these were generated by the tech sector. Amazon was an active buyer as well as Meta, which inked a 310 MW deal. INEOS signed for another 65 MW, defying the trend of a generally slow quarter for manufacturing signings. Nestlé had multiple signings again, with over 110 MW from a combination of solar, wind, and hydro.

Q3 sees major momentum

Q3 was stronger than both previous quarters combined, seeing over 2.5 GW signed across 43 deals. Both the manufacturing and tech industries signed over a gigawatt each. Robert Bosch inked eight agreements totaling over 250 MW in addition to 337 MW from Amazon. This brings Amazon’s European market total to 675 MW signed in 2022 and almost 4.2 GW since 2020.
The manufacturing sector saw more significant signings from INEOS and Borealis as well as from Alcoa, the Pittsburgh-based aluminum company that has signed for almost a gigawatt of capacity in Europe since 2017. Air Liquide, BASF, CEMEX, and Siemens are other notable offtakers from this sector. This quarter also saw activity from the finance sector, with UniCredit signing a 25 MW deal in Italy and law firm DLA Piper signing its second 13 MW agreement – the only law firm to participate in PPA markets thus far.

The takeaway

Despite increased activity from manufacturing companies and a lower reliance on tech companies, 2022 is not on track to match 2021’s capacity total. While there will be an increased number of agreements signed, the average deal size to date decreased from around 82 MW in 2021 to 51 MW in 2022.

European Offsite Renewable Energy Power Purchases by Sector

Source: BloombergNEF, Q3 2022 and Altenex Energy

Want to learn more? Explore our Q3 Renewables Market Update – a comprehensive assessment of current power purchase agreement (PPA) pricing developments, policy updates, insights on PPA evaluation, and trends shaping the global renewable energy market. Download a copy of the report here.