Mikkel Kring - partner at Our New Energy - is one of the leading advisers in the Nordic PPA markets. He’s been on stage at our events around Europe many times and will be one of the key experts speaking at our upcoming Solarplaza Summit Nordics, in Copenhagen on the 3rd of October. In preparation for the event, we caught up with him to get some quick updates on how recent deals have been impacting the PPA landscape and tap into his views on how the regional market is evolving in general.
Our questions to Mikkel:
- What makes the big Svea Solar deal you were involved in stand out from your perspective?
- How would you describe your current outlook for the Nordic PPA markets?
- What would your advice be to developers who are approaching the ready-to-build (RtB) stage with their solar projects?
Mikkel, you have just advised Svea Solar in executing an innovative corporate PPA in Sweden, which involved Energi Försäljning Sverige AB and Europe's largest indoor cultivation, Ljusgårda. What makes this deal stand out from your perspective?
Mikkel: Sweden has many mid-sized corporations that want to positively contribute to decarbonizing our society. However, they struggle with the complexity and process of executing PPAs that facilitate additional renewables capacity build-out. With this deal, we have established a framework that efficiently allocates the risks under a scalable structure. The structure resembles PPAs that we have recently executed in Denmark and the UK, where a credit-worthy energy company sits between the solar asset and the corporate and assists in the efficient allocation of risks. Another thing that makes it stand out is its pragmatism. When negotiating a PPA, it is important that all parties focus on the “ball” and are working to get the deal done. All parties in this transaction have approached the negotiations with pragmatism, which has only been possible due to the experience of the parties.
“When negotiating a PPA, it is important that all parties focus on the ‘ball’ and are working to get the deal done.”
How would you describe your current outlook for the Nordic PPA markets?
Mikkel: The Nordic PPA markets are currently very quiet, with limited corporate interest. Obviously, the summer break has stalled many conversations, however, 2023 and 2024 have been slow years for the Danish and Swedish PPA markets, with limited volumes being transacted. E.g. in Denmark around 250MW of solar PPAs were signed in 2023. And 2024 has seen around the same volume, with only 8 months passed. We see more merchant projects being built as a consequence of that low demand. Based on our conversations with various corporate buyers across the Nordics, we do expect a strong uptick in the first half of 2025.
The stall of P2X projects in Denmark has negatively impacted the shorter-term outlook for the local PPA market, and, subject to the outcome of the upcoming Danish off-shore wind tender, it is clear that the market will face a substantial long position between now and 2030, posing a challenge to particularly PV projects, given recent developments in capture prices. In Sweden, we remain positive about the outlook for the PPA market and are currently negotiating several PPAs there. The Finnish market is taking its first small steps in the emergence of a solar PPA market. However, we see a tough business case for PV, given the abundance of onshore wind projects and the high cost focus from most Finnish PPA buyers.
“Based on our conversations with various corporate buyers across the Nordics, we do expect a strong uptick in the first half of 2025.”
What would your advice be to developers who are approaching the ready-to-build (RtB) stage with their solar projects?
Mikkel: I’d emphasize three points:
- As the PPA off-take space is becoming increasingly fragmented - with more mid-sized buyers entering the market - originating such off-takers is becoming increasingly time-consuming. Hence, we encourage developers to start looking for PPAs much earlier than historically, as maturing and educating these smaller buyers take time.
- The increasing frequency of negative prices and lower capture rates are concerning, and targeted PPA prices and the risk environment should be properly analyzed and understood by any developer navigating this space. Negative price protection in PPAs is becoming crucial, and as ONE we believe a 10% price spread can easily emerge across PPAs with vs. without negative price protection.
- Focused negotiation: We encourage market participants to run focused and short negotiations to reduce the risk of a failed transaction. To achieve this, early alignment and clear mandates are needed on both sides. The turbulent environment implies that we too often see transactions dragging out and parties starting to question the deal fundamentals, as the surrounding environment changes in the meantime.
“Negative price protection in PPAs is becoming crucial.”
Looking for more actionable insights into the Nordic PPA markets? As mentioned, Mikkel will be presenting his full outlook at the Solarplaza Summit Nordics in Copenhagen on the 3rd of October. There, you’ll be able to catch up with him and many more market experts and industry peers. Learn more about the event, program, speaker lineup, and attending organizations on the event website.
