Hybrid power purchase agreements (PPAs) that combine renewable generation with battery energy storage systems (BESS) are gaining traction in Europe, despite requiring higher prices than standard solar PPAs. According to the European PPA Price Index for Q2 2026 compiled by LevelTen Energy, the additional value offered by hybrid structures is encouraging more corporate buyers to consider them over conventional arrangements.
The report shows that the P25 price for solar PPAs in Europe increased by 2.8% in the second quarter, marking the first quarterly increase after a year of consecutive declines. Wind power PPAs, meanwhile, fell 1.6%, continuing the downward trend for five consecutive quarters. P25 is a price metric used in PPA market analysis to represent the 25th percentile price of available offers.
LevelTen attributed the increase in solar PPA prices largely to higher electricity and gas prices following the closure of the Strait of Hormuz. The impact was particularly visible in Germany and Poland, where rising wholesale electricity prices increased PPA offers. However, price developments varied across Europe, with several markets still showing declines.
The company said solar PPA prices remain under pressure in countries with high photovoltaic penetration, including Spain and Germany, where increased generation capacity coincides with a growing number of hours of negative electricity prices. During the first half of 2026, France, Germany, Spain and Poland recorded more hours of negative prices than during all of 2025.
Market conditions create a mixed outlook for solar developers. While increased competition drives project owners to offer lower prices to secure PPAs, declining captured revenues reduce the expected profitability of some assets.
In response, developers are increasingly combining solar projects with battery storage to improve operational flexibility and capture additional market value.
Storage increases the PPA value
LevelTen’s new hybrid PPA index shows that contracts combining solar generation and storage are priced 24% higher than solar-only PPAs, while remaining 15% below wind PPAs.
The premium reflects the added value that storage offers. According to LevelTen’s analysis, integrating batteries can increase the value of a solar project by up to 80% in certain markets, including Germany.
“Storage enables the offering of different product types that help alleviate market pressure, increasing PPA value for both buyers and sellers,” said Plácido Ostos, director of European market analysis at LevelTen Energy.
The company added that the number of new hybrid PPA offers on its platform more than doubled compared to the previous year.
Spain and Germany are leading the adoption of hybrid PPAs
Spain and Germany are emerging as Europe’s leading markets for hybrid PPA structures. According to LevelTen, 29% of all PPA offers in the European index came from hybrid projects developed in the two countries.
During the second quarter, both markets recorded more hybrid PPA offers than any other contract type. Similar trends occur in Bulgaria, Poland, Greece, Latvia, Lithuania and Portugal.
In Germany, market interest is particularly strong for so-called “Green BESS” projects, where batteries can only be charged using renewable electricity generated by the associated facility. According to Pieter van der Meulen, head of the German market at LevelTen Energy Europe, these systems face fewer regulatory barriers than batteries with bi-directional access to the grid, while offering buyers additional value.
LevelTen concluded that as price cannibalization increases and electricity markets become more volatile, storage is becoming an increasingly important part of renewable energy projects and an important consideration in business PPA negotiations.
