European data center power purchase agreements (PPAs) dropped significantly from 4.2 gigawatts (GW) in 2024 to 2.6 GW in 2025, despite a rapid increase in capacity. This decline is attributed to delays in offshore wind projects and difficulties in negotiating PPA prices amid falling capture rates and rising instances of negative wholesale power prices, particularly impacting solar PV. Major hyperscalers are also reassessing their clean energy goals, which is dampening demand for renewable PPAs.

As European data center capacity is set to surge from 16 GW in 2024 to 36 GW by 2030, driven largely by the demand for artificial intelligence (AI) compute, the gap between increasing capacity and declining PPA activity raises concerns about energy sourcing for new data center loads. The UK, Germany, France, and the Netherlands are leading in new capacity, while the Nordic countries are emerging as competitive alternatives due to their low-carbon energy sources.

Market professionals should monitor the upcoming project pipeline from 2026 to 2028, as it will indicate whether data center demand can revitalize the PPA market. A recovery in offshore wind projects and renewed clean energy commitments from hyperscalers could be pivotal in restoring PPA volumes to previous levels.

Source: oilprice.com