European PPA prices for solar and wind power have risen 27.5% year over year, according to the first-quarter PPA Price Index from US renewables marketplace and procurement platform LevelTen Energy.
In its previous report, published in October, LevelTen Energy stated that the market was cooling down. The war in Ukraine, however, has dramatically changed the scenario. The conflict is the latest crisis to affect Europe's renewable energy markets, sending wind and solar power purchase agreement prices up 8.6% to an average price of €0.057/Wh. For solar, they range between €0.038/kWh in Spain and €0.074/kWh in Lithuania.
Despite this favorable scenario, interconnection and regulatory challenges are significant in multiple European markets, especially those related to permits, and further price increases are expected.
“In Spain, a number of factors are causing a continued increase in solar PPA prices,” said Luis López-Polín, LevelTen Energy's senior business development manager for Europe. In addition to the huge demand for PPAs, “an increasing number of retail electricity providers are purchasing spare capacity to meet their own decarbonization goals and provide green electricity offerings to customers,” he explained. “And after the storm of corporate contracts for Spanish renewables in the last two years, many projects with greater development maturity have found bidders, reducing the total number of available projects.”
Popular content
As corporate demand for PPAs reaches maximum levels amid rapidly approaching sustainability goals and continued energy market volatility, the supply-demand dynamic will likely continue to push PPA prices higher, he added.
In Italy, the second-largest concentrator of European PPA offerings on the LevelTen Marketplace (27%), the country's tiresome and lengthy permitting process has made it difficult for developers to build fast enough to keep up with demand. 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. Italian solar PPA prices have soared more than 23% year on year and currently stand at €0.0515/kWh.
This quarter, for the first time, Portuguese solar energy is included in the LevelTen Energy PPA Price Index. Frederico Carita, director of LevelTen Energy's developer services for Europe, states that “in Portugal, we are seeing an increase in available solar capacity as more projects are granted interconnection permits, both through bidding with success in government auctions and normal permitting processes.”
In Sweden, PPA solar prices also rose, reaching €0.04013/kW, an increase of 13.4% compared to the fourth quarter of 2021.
This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: editors@pv-magazine.com.
4 comments
By submitting this form you agree to pv magazine using your data for the purposes of publishing your comment.
Your personal data will only be disclosed or otherwise transmitted to third parties for the purposes of spam filtering or if this is necessary for technical maintenance of the website. Any other transfer to third parties will not take place unless this is justified on the basis of applicable data protection regulations or if pv magazine is legally obliged to do so.
You may revoke this consent at any time with effect for the future, in which case your personal data will be deleted immediately. Otherwise, your data will be deleted if pv magazine has processed your request or the purpose of data storage is fulfilled.
Further information on data privacy can be found in our Data Protection Policy.