COVID-19 has marginal effect of PPA costs in Europe as well as America

Jan 15, 2021 09:53 AM ET
  • COVID-19 has had a marginal influence on Power Purchase Agreement (PPA) deal costs, according to research from LevelTen Energy.
COVID-19 has marginal effect of PPA costs in Europe as well as America
Image: European Energy

In the firm's Q4 PPA Price Index, it looks at just how one of the most affordable (P25) PPA provides in North America as well as Europe have been influenced by the pandemic in contrast with earlier in the year.

Solar costs in European PPA's dropped slightly it discovered, falling an additional 2.7% in Q4 in an extension of a fad seen because Q2 2020. When combined with wind PPA's-- which alone saw a small dip of 1.7% in Q4 after expanding earlier in the year-- in the blended P25 Index, costs decreased by 2% from Q3.

In Europe the top market remained to be Italy, making up 31.7% of offers from designers, complying with by Spain, which driven by a thriving solar industry took 26.7% of all deals.

PPA costs continued to increase through 2020 in America, but the COVID-19 pandemic is having a much larger influence on development timelines than on costs. Solar PPA offer costs started to increase in the US for the first time since 2018 LevelTen noted, although it was overtaken with wind rate boosts.

Year-on-year, wind as well as solar in the mixed technology index saw offer rates for PPAs climb 17.7% in the United States. This was driven by a variety of factors, consisting of COVID-19, grid link hold-ups as well as allowing challenges as Rob Collier, vice head of state of Developer Relations, LevelTen Energy clarified.

Where there was a high demand for projects, these elements created a bottleneck, with supply restrictions then placing higher stress on prices.

" In enhancement, many of one of the most financially competitive projects have currently acquired with offtakers, leaving higher-priced projects offered out there."

Nonetheless, project timelines were much more significantly impacted than PPAs, with 59% of developers stating COVID postponed business operations dates, and 41% claiming it delayed PPA arrangements and executions according to a study by LevelTen.

" Some offers took a little bit longer than expected: purchase and also financing groups were naturally concentrated on various other priorities when shutdowns started, but as the world adjusted to a brand-new normal, renewable energy purchases chose back up," said Collier.

" We do not expect the rising costs to soften demand in 2021, as boards of supervisors, capitalists, governments, workers and also consumers will remain to promote sustainability commitments that will certainly call for all huge energy consumers to transform towards renewables."

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