Sustainable PPA prices rise 7.8% in reaction to Europe's growing energy crisis

• Upward price stress continues for third consecutive quarter to the tune of 17.4% across the duration, compounded by snowballing energy crisis
• Italian P25 solar PPA prices rise virtually 21% in Q4, with Spain experiencing short-term cool off
• Regardless of challenges, developers and also buyers are still signing contracts, with non-standard agreement structures paving the way

As the European energy crisis strengthens, sustainable PPA prices remain to climb, climbing by 7.8% quarter over quarter, unveiled today by LevelTen Energy's Q4 2021 PPA Price Index. The Index series, developed by LevelTen Energy, a leading carrier of renewable deal infrastructure, analyses countless wind and solar PPA pricing offers listed on the LevelTen Energy Marketplace across 21 countries in Europe and North America to supply insight into the market.

Upward price stress trends continue for the 3rd consecutive quarter, completing 17.4% over the nine-months. Macroeconomic as well as regulatory difficulties, including the energy crisis, have actually been compounded by supply chain restrictions, inflation, increasing commodity prices as well as government auctions culminating in reduced PPA materials and climbing prices. Consequently, Europe's P25 Index-- an aggregation of the lowest 25% of wind and also solar PPA offers-- now stands at 52,46 EUR per MWh, rising 3.78 EUR from Q3.

Sky-high wholesale electricity prices have created a significant effect on both PPA supply as well as prices.

" With wholesale prices as high as they are, selling energy into wholesale electrical power markets is an increasingly appealing option for sustainable developers. Developers will usually get the majority of a project's generating capacity through PPAs, and offer the staying capacity into the wholesale market-- even though doing so lugs a level of seller danger inherent to rising and fall electricity prices," said Fred Carita, Supervisor of Developer Solutions, Europe. "With wholesale prices being as high as they are, developers are raising their PPA prices to comprise the revenue they can have or else made selling a greater portion of their electrical energy on the day-ahead market.".

Italian prices increase, Spanish market continues to cool, as well as Nordics mostly protected.

Previously characterised by its security throughout most of 2021, Italian P25 solar prices rose by nearly 21% in Q4. As the country's affiliation procedure reduces development timelines for developers, projects with a clear view to business procedure are increasingly preferable to offtakers.

P25 solar prices increased 11.5% for Spain in Q4, with proceeding signs of a short-term cool off specified by developers embracing "wait-and-see" tactics. Consequently, the nation's portion of total European offers on the LevelTen marketplace has actually dropped 12% from Q3. This results from the application of profit topping laws in the region, incorporated with a 500 MW federal government auction slated for Spring.

Mostly protected from Europe's energy crisis because of its abundance of affordable hydropower, Nordic pricing remains much less prone to higher price stress. Nevertheless, not all markets experience equal security. Imports from Denmark leave Sweden vulnerable to the effect of German wholesale electrical power and PPA prices. Specifically, southerly Sweden is more subjected to Danish as well as central Europe connections, causing increasing PPA prices as seen in Swedish P25 wind enhancing by 24% in Q4, getting to 36,48 EUR per MWh.

In spite of headwinds, between 2020 and also 2021, there was a 69% increase in annual contracted capacity in Europe, according to market group information. It's clear that energy developers and also customers are efficiently navigating these uncertain waters, with non-standard agreement frameworks paving the way.

" The good news is that PPA bargains are still getting done," said Rob Collier, VP of Developer Solutions at LevelTen Energy. "Agreement advancements customized to existing market conditions are making it possible for successful PPA deals. And 2nd, purchasers have so far remained undeterred by market problems, suggesting that need is still high. Both of these truths are encouraging, because it implies that events on both sides of the table are incentivized to locate common ground.".