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The number of power purchase agreements in Europe decreased by 60% compared to the same period last year, while contracted capacity has dropped by 40%, according to RE-Source Platform.
Europe’s power purchase agreement (PPA) market is facing headwinds in grid development, permitting and electrification and from negative electricity prices, RE-Source Platform warned.
RE-Source Platform facilitates corporate renewable energy sourcing in Europe. It was founded by WindEurope, SolarPower Europe, Climate Group RE100, and World Business Council for Sustainable Development, and steered by a group of corporate buyers and developers.
There are four main problems
“This slowdown is very paradoxical. Europe has no path to energy security and competitiveness unless it electrifies its economy – shielding itself from energy shocks and leveraging large scale deployment of wind and solar energy. But the market is facing headwinds,” the update reads.
The platform identified four main problems.
Europe is not expanding its grid infrastructure quickly enough. The main bottleneck is grid permitting with hundreds of gigawatts of projects awaiting grid connection.
The permitting process for renewables remains too slow. The Renewable Energy Directive has set permitting rules for acceleration, but EU member states have not implemented them.
The Clean Industrial Deal rightly names PPAs as a key solution
Direct electrification is the cheapest and most efficient way to decarbonize. It could also improve competitiveness and energy security, however Europe’s electrification rates are stagnating.
The increase of the negative price hours is making PPA negotiations harder. The way out are energy storage solutions.
The platform stressed the importance of PPAs.
“The Clean Industrial Deal rightly names PPAs as a key solution. Without them, we risk losing industrial competitiveness – and missing our climate targets. PPAs are a cornerstone of Europe’s industrial decarbonization,” the platform added.
They also give companies price certainty, help new wind and solar projects get financed and cut buyers’ exposure to volatile energy markets, according to the update.
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