Hybrid power purchase agreements (PPAs) combining renewable generation with battery energy storage systems (BESS) are gaining traction in Europe, despite commanding higher prices than standard solar PPAs. According to the European PPA Price Index for the second quarter of 2026, compiled by LevelTen Energy, the additional value offered by hybrid structures is encouraging more corporate buyers to consider them over conventional agreements.

The report shows that the P25 price for solar PPAs in Europe increased by 2.8% in the second quarter, marking the first quarterly rise after a year of consecutive declines. Wind PPAs, meanwhile, fell by 1.6%, extending a downward trend to five consecutive quarters. P25 is a pricing 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 pushed up PPA offers. However, price trends differed across Europe, with several markets continuing to record declines.

The company said solar PPA pricing remains under pressure in countries with high photovoltaic penetration, including Spain and Germany, where increased generation capacity is coinciding 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 pricing than during the whole of 2025.

The market conditions are creating a mixed outlook for solar developers. While increased competition is pushing project owners to offer lower prices to secure PPAs, declining captured revenues are reducing the expected profitability of some assets.

In response, developers are increasingly pairing solar projects with battery storage to improve operational flexibility and capture additional market value.

Storage increases 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 additional value provided by storage. According to LevelTen’s analysis, integrating batteries can increase the value captured by a solar project by up to 80% in certain markets, including Germany.

“Storage enables the offering of various product types that help alleviate market strain, thereby enhancing 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 listed on its platform has more than doubled compared with the previous year.

Spain and Germany lead hybrid PPA adoption

Spain and Germany are emerging as Europe’s leading markets for hybrid PPA structures. According to LevelTen, 29% of all PPA offers included 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 are emerging 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 bidirectional grid access while offering additional value to buyers.

LevelTen concluded that, as price cannibalization increases and electricity markets become more volatile, storage is becoming an increasingly important component of renewable energy projects and a key consideration in corporate PPA negotiations.