Swiss analytics firm Pexapark says the latest developments in the Middle East are having a visible impact on the long-term valuation of Power Purchase Agreements (PPA) in Europe, as the market starts to reprice in the coming years.
Strikes on liquefied natural gas (LNG) infrastructure in the Middle East will impact long-term PPAs and the economics of battery energy storage systems (BESS), This is evident from an analysis by the Swiss research agency for sustainable energy Pexapark.
In Pexapark’s latest blog update, Nicolas Briet, chief analyst for renewable energy and BESS, said reported strikes affecting Qatar’s Ras Laffan industrial complex, the country’s main location for LNG production, introduce “more structural supply risk” to conflict in the Middle East and a tightening of medium-term fundamentals in Europe.
Briet added that these developments are starting to have a more visible impact on long-term PPA valuations.
He explained that while the impact remains relatively limited in markets such as Germany, where PPA valuations are anchored to energy prices over a long period of time, the situation is different in markets where term liquidity is limited to only two or three years, such as the United Kingdom.
“In these cases, long-term PPA valuations rely heavily on extrapolating short- and medium-term price signals. As a result, any change in medium-term fundamentals feeds into long-term valuations much more directly and completely, leading to larger repricings,” Briet wrote. “This is already visible as the PPA Fair Value of a 10-year Pay-as-produced (PAP) solar PPA in Britain has increased by around 19% since the start of the conflict.”
Image: Pexapark
Briet also said that despite the improving PPA economy, transaction activity is unlikely to accelerate in the near term, with buyers remaining cautious about securing prices during a geopolitically driven peak. “At the same time, higher global energy prices contribute to the expected sustainable cost base,” Briet wrote. “Equipment, transportation and construction costs are exposed to energy inputs, putting upward pressure on expected capital expenditures.”
Briet’s update added that battery storage is the most immediate beneficiary of changing market conditions, with higher gas prices increasing both the absolute price level and intraday volatility, leading to wider spreads.
Pexapark’s latest analysis of the European PPA market shows that February 2026 had the highest monthly volume of new deals since February 2024. reaching 30including the longest PPA observed in the European market to date.
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