Average solar power purchase agreement (PPA) prices in Europe dropped to €34.25/MWh (approximately $40.05) in the third quarter of 2025, according to a recent report by LevelTen Energy. This decrease represents a 3% reduction from the previous quarter and a significant 19.4% decline from the same period in 2024. Amidst this trend, the report indicates a growing preference for hybrid PPA projects that incorporate battery energy storage systems (BESS) rather than standalone solar projects.
The report reveals that solar PPAs continue to be more affordable compared to other renewable energies, with average wind PPAs priced at €52.75/MWh, marking a 1.4% rise from the second quarter. This trend of declining solar prices has accelerated over the past year, contrasting with the slower price adjustments seen in wind and hybrid contracts. Andrés Acosta, LevelTen’s director of innovation in Europe, noted that factors such as solar price cannibalization are diminishing the appeal of standalone solar assets, pushing investors towards projects that integrate storage solutions.
The report illustrates significant regional disparities, with average solar PPA costs ranging widely across Europe. For instance, in Portugal, the average PPA price fell to €33.46/MWh, while in Ireland, it remains the highest at €120.00/MWh, reflecting a notable 6.1% decrease in Portugal’s pricing since the second quarter. Spain, which previously held the title for the lowest solar PPA prices, also saw a 14.1% drop over the past year to maintain competitiveness.
Both countries faced substantial shifts in their markets following a grid blackout attributed to over-voltage issues in April. This period of instability has increased uncertainty, mirroring similar price fluctuations across the broader European landscape. The report suggests that while solar PPA prices are generally trending downward, the expansion of data centers in various European nations is unexpectedly boosting demand for clean energy, particularly in countries like Ireland and Finland, where investment in data infrastructure has led to higher PPA values.
Contrasting with Europe’s declining solar PPA prices, North America is experiencing a 4% increase. LevelTen attributes this rise to uncertain policy conditions in the U.S. renewable energy sector, underscoring the critical role that regulation plays in shaping market confidence.