The solar PPA market is going through one of its most challenging periods. Miguel Marroquín, Managing Director of Our New Energy, explains that buyers are currently bidding for solar energy between 25 and 30/MWh, but emphasizes: "For a producer to sign a PPA that works for them, that contract must be at least 35." In this context, the few agreements that are signed are at the upper end of the range, at 30/MWh , and only for projects with extremely competitive conditions; "a perfect photovoltaic system," as the specialist describes it in a conversation with Strategic Energy Europe. But many developments fail to cover their costs at that price, which generates a direct consequence: a very low volume of contracts signed in this first quarter of 2025. Marroquín maintains that "activity is very, very low.
There's a lot of supply, but buyers aren't willing to pay what producers need to cover costs." This imbalance, combined with a structural oversupply and the lack of electricity market reform, is blocking the viability of shovel-ready projects.
Wind power: rising prices, but no availability While solar prices remain depressed, wind energy prices are experiencing the opposite. "As solar prices go down, wind prices go up," the expert notes. Currently, the wind market is seeing prices exceeding 50/MWh, even reaching 54/MWh. But unlike solar, the problem with wind power is not the price, but the lack of available projects. "There are no more parks on offer.Those who had assets to sign PPAs have already sold them.
There's no availability today," he says.
This lack of inventory leaves buyers without options in a context where they would be willing to pay more, creating a new point of friction in the market equilibrium. Inflexible deadlines and banking pressure Closing contracts is complicated not only by price issues but also by the lack of flexibility in terms of deadlines. According to Marroquín, most PPAs are still signed for ten years, despite attempts to extend them to twelve or fifteen. "There's no real trend toward extending contracts.Banks continue to set a ten-year benchmark as a condition for financing," he explains.
This represents a specific limitation, especially for projects that may require more flexible conditions to access financing or for those operating in more complex environments. This type of rigidity prevents expedited commercial closures and excludes many mid-sized developers or new players from the market who lack sufficient financial backing to negotiate more demanding terms. Negative merchant prices and exposed contracts Another major concern at the start of 2025 is the growing impact of negative price hours on the wholesale market. In 2024, there were nearly 700 hours in which prices were at or below zero, and in that context, if a PPA does not include coverage clauses for those situations, the producer directly does not receive income for their energy. Moreover, in some cases, contractual logic can even work against the generator. "We've seen contracts where if the price is negative, the buyer keeps the difference.In other words, they don't just not pay, they actually get paid.
That's not fair
," Marroquín says. A more balanced alternative, he suggests, would be to incorporate linear protection mechanisms: establishing minimum values or calculating differences throughout the year rather than at specific times. Increasingly tough contracts: the scope for negotiation is diminishing In addition to the challenge of prices and deadlines, a trend that has become more pronounced in the last year is the imposition of contractual conditions by buyers. "Previously, clauses such as coverage of negative prices, adjustments for regulatory changes, or payments for imbalances were negotiated.Today, they are already required," notes the Our New Energy representative.
This dynamic radically changes the negotiating power within the contract, shifting the decision-making capacity from the originator to the offtaker. For the interviewee, this puts smaller developers or those without solid financial and legal advice in a particularly disadvantageous situation. Structural criticism: "An energy transition cannot be based on such a market" Marroquín goes beyond the current situation and offers a fundamental reflection on the European strategy: "An energy transition cannot be based on a PPA market that operates like this.With such strong imbalances between supply, demand, and prices."
In his view, the lack of regulatory instruments to mitigate market distortions is leaving many renewable energy projects out of the system, just when they are most needed to meet the region's climate and energy goals. "There is a commitment to the market as a central tool, but if there are no reforms or stabilizers, we will continue to see projects that are finished and fail to advance, and buyers who cannot find energy, or who benefit under unsustainable conditions," he concludes.