White Paper - PPAs and Business Models

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The European solar PV market is projected to grow twofold in annual deployments between 2016 to 2020 according to an analysis published by SolarPower Europe. Using innovative financing schemes and business models is therefore crucial to promote investor confidence, given the capital-sensitivity of renewables and specifically solar. 

One of the main solar business models is self consumption, in which the consumer owns the PV system enabling them to reduce electricity costs and sell the surplus back to the grid. The second main business model is the Power Purchase Agreement (PPA), which entails a contract between the PV owner and the consumer to sell them a specific amount of energy at a set price for a fixed duration. Less common models include the Virtual Power Plant (VPP) and cooperative model.

All in all, the European solar PV industry has weathered some major transformations in the recent years in addition to market parity and the increase in demand for solar energy across the continent. These transformations are primarily linked to regulatory shifts and policy changes. This has resulted in significant changes in solar business models, leading to a need for innovative solutions designed to address this additional complexity. Power Purchase Agreements (PPAs) have and will continue to play a crucial role in enabling such solutions in the European photovoltaic market.

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