Wind, solar PPA prices jump 27.5% in Europe year over year

Power purchase agreement market platform operator LevelTen Energy said its index of price offers from renewable energy project developers in Europe for corporate buyers rallied 8.6% in the first quarter and 27.5% on an annual scale. The firm pointed out that the war in Ukraine additionally fueled the ongoing energy crisis.

In Europe, developers of wind and solar power plants are struggling to meet demand from corporate clients because of supply chain, interconnection and regulatory challenges, LevelTen Energy said in its quarterly report on the market for power purchase agreements or PPAs.

Its P25 blended price index for 14 European countries advanced 8.6% in the first three months of the year and 27.5% on an annual basis, to EUR 57 per MWh. It compares to growth of 9.7% and 28.5%, respectively, for North America, where the equivalent index of offered prices reached USD 39.91 per MWh.

The solar PPA subindex for Europe rose 4.1% in the first quarter and 20% on an annual scale to EUR 49.92 per MWh. For wind, the measure of price offers surged 12.4% and 34.1%, respectively, to EUR 64 per MWh.

Unrelenting demand

Europe’s energy markets are enduring coinciding crises: the ongoing energy crisis that began last year and the energy market impacts of the conflict in Ukraine, the firm said. The war is exacerbating Europe’s energy crisis and further fueling the unrelenting demand for renewable energy contracts from corporations, the report’s authors stressed.

LevelTen Energy’s indicator of PPA price offers in Europe climbed to EUR 49.92 per MWh for photovoltaics and to EUR 64 per MWh for wind

Developers and buyers say they want to build and procure more renewables – including in countries that are highly dependent on Russian natural gas, LevelTen Energy claimed, citing its survey results.

In response to volatile energy prices, demand for power purchase agreements is skyrocketing since PPAs can be used as effective tools to lock in electricity prices in the long term, according to the firm, which operates a trading platform in the segment. The index is calculated from the data on price offers from owners of renewable energy projects under development.

Reforms to take time to bring results

Italian lawmakers changed environmental review procedures last year in a bid to streamline and speed up the process, but it will take time to see these changes reflected in the market, the report reads. Italian P25 solar PPA prices have soared more than 23% year over year to EUR 51.5 per MWh.

In Germany, permits for onshore wind projects can take around five years to secure, and there is limited land available for development, LevelTen Energy added. Germany is streamlining the permitting process and it set aside 2% of land for wind energy projects.

Previous regulatory reforms helped catalyze the country’s solar industry, according to the report. The national solar PPA index increased 25% year over year to EUR 60 per MWh.