Solar power purchase agreements (PPAs) have dropped for the first time in Europe in two years. Meanwhile, overall wind and solar PPA prices remain 56% higher year-on-year, according to a new report from LevelTen Energy.
The report shows a drop in solar prices of 4.7% in 12 months to $79.93/MWh (€73.20/MWh). This is the first drop in the price of solar PPAs in two years. For the first quarter of 2023, solar PPA prices sat at 47% higher than the first quarter of 2022, and 76% higher than the first quarter of 2021.
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LevelTen’s report tracks clean energy price movements across 20 countries in Europe, using data from its PPA marketplace.
Placido Ostos, senior European energy analyst at LevelTen Energy, attributed the drop in the price of solar PPAs to “the fact that supply chain difficulties brought by the pandemic are abating as manufacturers ramp up production and logistical challenges resolve”.
He went on to say: “The gradual decline in inflation, although compensated by higher interest rates, is providing developers with improved visibility into their capex costs, which means fewer uncertainties to factor into PPA prices”.
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All markets except Spain, Europe’s most active PPA market, saw a drop in solar prices. LevelTen found that prices climbed by rising 9.8% during the first quarter of 2023 and 32.2% on a year-on-year basis. In February, the Ministry of Ecological Transition in Spain approved 132 solar PV projects across the country, with a total capacity of 24.8GW.
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By GlobalDataPPA prices for wind change with wholesale power price
Wind prices, however, have continued to rise by 35% over the last six months. The overall index of wind and solar power purchase agreements across European markets rose 56% year over year, sitting at $97.06/MWh (€88.88/MWh).
LevelTen attributes the rising price of wind power PPAs to continuous challenges within the industry, including the price of materials and permitting barriers.
Ostos said: “Recent data has revealed a substantial drop in wind investments, with 2022 investments marking the continent’s lowest since 2009 – an alarming figure. Trade groups have largely pointed to market interventions and other barriers as deterrents to investor confidence in the sector”.
However, wind development PPAs saw a resurgence on LevelTen’s marketplace for the first quarter of this year in the in France, Romania and the UK, which Ostos described as an “encouraging sign”.
Additionally, Ostos claimed that: “The drop in natural gas and wholesale electricity prices is adding pressure to developers to decrease their PPA prices in order to remain a competitive option for buyers”.
