UK solar PPA raises 18.4% in Q2 to over ₤ 60/MWh in new European PPA Index

Jul 14, 2022 06:06 PM ET
  • Solar energy acquisition agreements (PPA) in the UK climbed 18.4% throughout Q2 and surpassing ₤ 60/MWh, yet less than the 24% rise of wind rates.
UK solar PPA raises 18.4% in Q2 to over ₤ 60/MWh in new European PPA Index
Image: Keele University

Overall in Europe PPA costs have skyrocketted 47% year-on-year as the continent's energy crisis persists together with skyrocketing inflation, according to renewable energy marketplace LevelTen Energy's newest Price Index report.

Regardless of PPA's pricing upwards, the contracts remain to "stay eye-catching" as the wholesale electrical energy prices throughout Europe have stayed high as well as will remain to in the coming months.

The ongoing conflict in Ukraine has actually caused PPA costs to rise with supply failing to keep up with need, stated Flemming Sørensen, VP of Europe at LevelTen Energy.

Europe's P25 Index-- an aggregation of the lowest 25% of solar and also wind PPA offers-- now stands at EUR66.07/ MWh (₤ 55.89/ MWh), a 16% walk on Q2, a nearly 8 percentage point increase on the previous quarter when costs enhanced 8.1%.

On the other hand, PPA prices has also been swayed by drives from European governments to accelerate the implementation of renewables, as well as the growing economics of seller service models.

"With public and private sector renewable ambitions growing, programmers have no scarcity of alternatives when it concerns selling their clean electrical power," said the report.

This is a trend seen in Poland, where P25 solar prices have reached EUR95/MWh (₤ 80.32/ MWh)-- prices surged 36.2% due to the cessation of gas imports from Russia-- with programmers taking their projects to the wholesale market as its power prices remain high, abandoning PPAs.

The P25 Index for solar offers climbed 19.1% to EUR59.43/ MWh in Q2, nearly EUR10 greater from Q1 2022. Markets in Spain and Finland remained much more secure, however, with P25 index prices for solar also dropping a little-- by 2.6%-- in the last.

Issues impacting Europe's PPA are set to continue for time yet as well, with Sørensen specifying that there isn't a "clear end visible" as the origin of the discrepancy can take years to solve.

"Developers remain to battle to build new solar and also wind projects, which are sorely required, because of hard allowing and affiliation challenges and the increasing price of inputs as well as labor," included Sørensen.

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