Renewable PPA prices in Europe up 8% because of ongoing energy crisis

Jan 14, 2022 02:16 PM ET
  • Renewable power purchase agreement (PPA) prices in Europe remain to climb up, rising 7.8% quarter-on-quarter in response to the continent's growing energy crisis, according to brand-new research from LevelTen Energy, a provider of renewable transaction infrastructure.
Renewable PPA prices in Europe up 8% because of ongoing energy crisis
Image: Hive Energy

Macroeconomic and regulative obstacles, consisting of the energy crisis, have actually been compounded by supply chain restraints, inflation, increasing commodity costs and federal government auctions finishing in lowered PPA products and also increasing prices, the firm said in its Q4 2021 PPA Price Index report.

Because of this, Europe's P25 Index-- an aggregation of the most affordable 25% of solar and also wind PPA offers-- currently stands at EUR52.46/ MWh (US$ 60.16/ MWh), a 7.8% hike on Q3, which additionally saw an 8% enter prices on the previous quarter.

Higher price stress fads have now continued for the third successive quarter, standing for a 17.4% rise in P25 price deals throughout the nine months.

With wholesale prices as high as they are, marketing energy right into wholesale electrical power markets is a progressively appealing option for renewable programmers, said Fred Carita, manager of programmer services, Europe, at LevelTen.

" Programmers are elevating their PPA prices to comprise the profits they could have or else made marketing a better percent of their electricity on the day-ahead market," he said.

While the P25 Index for solar deals increased 7.2% to EUR47.97/ MWh in Q4, the index for wind offers raised 8.2%, currently sitting at EUR56.96/ MWh.

The report disclosed that although Italy's solar market has shown "exceptional price stability" over the last year, this fad broke in Q4, with Italian P25 solar prices soaring by 20.9%. Developers in the country may be padding PPA prices to account for increased uncertainty stemming from authorization processes for permitting and interconnection legal rights seemingly not able to keep pace with the growing project pipe, according to LevelTen.

Solar PPA prices in Spain likewise increased by 11.5% during Q4 as steps presented by the country's government to restrict windfall profits of renewable resource plants likely created some upward price stress, the report stated.

Despite the headwinds, LevelTen claimed that programmers and buyers are successfully browsing these uncertain waters, with non-standard contract frameworks paving the way.

" Fortunately is that PPA bargains are still getting done," claimed Rob Collier, VP of programmer services at LevelTen Energy. "Contract innovations tailored to current market conditions are enabling successful PPA purchases. And second, buyers have until now remained undeterred by market problems, meaning that demand is still high."

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