The PPA price for pure photovoltaic projects has fallen by 20% in the past year, making such contracts less competitive. However, clear structures for profitable hybrid PPAs are now starting to take shape, says Pieter van der Mullen, Senior Account Manager at LevelTen Energy, in an interview with pv magazine.
pv magazine: Do you think pure PV PPAs will remain an attractive segment in Germany?
Pieter van der Meulen: Pure PV PPAs are becoming less competitive in markets such as Germany, where the rapid growth of solar energy has led to significant price cannibalization and a sharp increase in the number of hours with negative prices. By 2025, Germany has already experienced more than 470 hours of negative prices, and almost 30% of PV generation took place during those periods – double last year. This low capture rate makes it more difficult to achieve long-term revenue security for PV-only projects. While there is still some demand for competitively priced pure PV PPAs, these are typically only signed at very low prices. As a result, we see a clear shift towards hybrid PV+storage PPAs, which allow developers and buyers to shape supply profiles, reduce exposure to negative prices and unlock additional value from storage flexibility. These hybrid structures are also becoming increasingly bankable, allowing projects to be financed in a tightening market. This trend is evidenced by significant interconnection queues for BESS assets, many of which are co-located with PV, underscoring the market’s growing focus on hybrid configurations. From LevelTen Energy’s perspective, hybrid PPAs represent the next evolution of the market. As exposure to negative prices increases and capture rates decline, shaping generation through storage – and adopting more innovative virtual settlement structures that absorb higher prices – will be essential to maintaining the economic viability of new solar capacity.
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What are the price expectations of buyers and sellers for 10-year PPAs in Germany?
According to LevelTen Energy’s Q3 2025 PPA Price Index, the P25 price for solar PPAs in Germany – representing the most competitive quartile of offers – was €52 ($60.1)/MWh. While contract terms in the market range from five to 20 years, with an average of 11.1 years across Europe, this figure reflects the typical price range in which most ten-year PPA transactions take place. German PPA solar prices have fallen by 4.6% quarter-on-quarter and 20% year-on-year, due to oversupply, increasing price cannibalization and the increased occurrence of negative price periods. Developers are increasingly offering aggressive prices to attract business buyers as subsidy schemes become less favorable.
Are you aware of hybrid PPA contracts for PV-plus-storage projects signed in Germany?
We are starting to see the first hybrid PPAs being signed in Germany. At LevelTen we have supported several renowned developers in bringing their hybrid PV-plus-storage products to market, guiding them through the entire auction process – from defining the product and reaching interested buyers to facilitating the selection of offers. In recent buy-side RFPs that included German demand, approximately 15% of the bids received were for hybrid structures, many of which were shortlisted and are now under negotiation. This significant and growing share shows that both developers and buyers are becoming increasingly comfortable with hybrid configurations, especially as they look for ways to limit exposure to negative prices and improve the bankability of projects.
Which European country is leading in PV-plus-storage hybrid PPAs, and how many such contracts have been signed?
The UK currently leads Europe in the development of co-located PV-plus-storage projects, driven by supporting policy frameworks and advanced grid connection processes. However, these hybrid project developments have not necessarily signed hybrid PPAs. Spain and Germany follow closely behind, with both markets showing strong fundamentals and growing interest in hybrid PPA structures that combine renewables with storage flexibility. While the number of hybrid PPAs signed to date remains limited, market dynamics and improving financeability are paving the way for wider adoption across Europe.
In many cases, batteries located next to photovoltaic installations are only approved as a storage system for green energy and are therefore not allowed to be charged via the electricity grid. Are such systems still economically attractive under these circumstances?
Hybrid PPAs remain attractive even if the battery is ‘green’ and is only charged from the nearby PV plant. A co-located BESS increases the capture price of the asset (expected increases of up to approximately 30% over PV alone are achievable) by storing energy during cannibalized midday hours. It also helps buyers shape supply towards 24/7 goals: stored energy is fully traceable under current GO rules, and hourly GOs, once available, will further reflect the shaped profile – some buyers are even willing to pay a premium for this traceability. Where grid charging is permitted, it makes sense to capture value from multiple revenue sources, such as day-ahead/intraday arbitrage, capacity markets and ancillary services. This approach remains compatible with PPAs by sharing the arbitrage component with the buyer, often through virtual settlement structures, while the seller retains the benefit of exploiting the battery in a multi-market optimization strategy. This enables both a higher captured price for the buyer and stable revenue for the seller, while keeping the optimization upside and complexity on the seller. In short, green BESS hybrids stand on their own merits (price increase, risk mitigation, 24/7 coordination). With flexible, grid-chargeable BESS, combining stable PPA revenue with targeted market participation typically delivers the strongest, most bankable outcome for both parties.
Is there a typical or preferred structure for a hybrid PPA, for example a PPA-plus-Tolling agreement with the same off-taker, or a well-defined generation profile?
The market has not yet settled on a single hybrid PPA model, but three clear structures are emerging. The most common is still a PPA combined with a storage or tolling agreement, giving buyers flexibility while securing affordable revenues for developers. Others – especially for buyers who are unwilling or unable to take over the operation of the BESS resource – opt for integrated “hybrid-style” PPAs, where the seller uses the battery to provide a fixed or customized generation profile tailored to the buyer’s load. When it comes to a battery, the contracts should specify how it works – whether it is a green BESS with charging exclusively from renewable energy sources or a flexible BESS where charging from the electricity grid is allowed – as this defines risk distribution and market participation. A third model, which LevelTen Energy sees gaining popularity, is based on simplified virtual structures such as PPA-plus-Tolling or Hybrid Custom Shape (7×16) agreements. These make hybrid deals more transparent and bankable and are likely to become the preferred approach for corporate buyers as the market looks for standardization and scalability.
Does more work need to be done to define standards for hybrid PPAs that would support the growth of this segment?
Yes – the hybrid PPA market is still mature and more work is needed to establish common standards that can unlock its full potential. Today, there is no single model for structuring these agreements, and the variety of approaches makes analyzing, financing and approving deals complex – especially for corporate buyers. Industry leaders are now working to simplify hybrid structures to build trust and liquidity. At LevelTen Energy we have identified four practical models: Tolling, PPA-plus-Tolling, Hybrid Custom Shape (7×16) and Hybrid Green BESS designed to reduce complexity and make the value of storage more accessible. As more hybrid deals are completed, these simplified frameworks will provide the foundation for a more transparent, scalable market.
These standards still need to be developed, right?
You’re partly right: complex hybrid PPAs that require the buyer to actively manage the battery or assume market risk are typically suited to sophisticated buyers with trading capabilities, such as utilities or large industrial companies. Structures such as pure hybrid PPAs or tolling agreements require expertise in optimization and exposure management. However, the market is evolving quickly. New seller-managed hybrid models are being designed precisely to make these deals accessible to buyers without trading desks. For example, Hybrid Custom Shape and PPA-plus-TBx structures allow the seller to control battery optimization and market participation, while the buyer simply benefits from a shaped, more stable durable profile. At LevelTen Energy, we see these simplified formats gaining momentum as they combine price stability with low complexity, opening up the hybrid PPA market to a much wider range of corporate buyers.
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