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European Q2 Solar Quotations Rose 19.1%! PPA Up 47%

Jul 19, 2022Leave a message

Power purchase agreement (PPA) prices in Europe have risen by an "astonishing" 47% year-on-year as inflation soars amid the ongoing energy crisis on the continent, LevelTen Energy said.


With wholesale electricity prices continuing to remain high, this makes PPA prices "still attractive" despite rising prices.


In LevelTen's latest price index report, Flemming Sørensen, the electricity pricing company's European vice-president, said that the company had previously forecast that PPA prices in Europe would level off this year, but the Russian invasion of Ukraine caused prices to spike and supply couldn't keep up. need.


As a result, Europe's P25 index (the lowest 25% aggregate of solar and wind PPA offers) is now at €66.07/MWh ($66.20/MWh), up 16% from the second quarter and up 8.1% from the previous quarter. nearly 8 percentage points.




In the second quarter, the price of solar PPA increased by 10 euros and is now almost 60 euros/MWh, a 19.1% surge from the previous quarter.


At the same time, PPA pricing has also been driven by European governments accelerating renewable energy development and improving business model economics.


"The growing ambitions of renewable energy in the public and private sectors have left developers with many options when it comes to selling clean electricity," the report said.


This is exactly a trend emerging in Poland. P25 solar prices in Poland have reached EUR 95/MWh. Prices surged 36.2% as gas imports from Russia were stopped. Developers move their projects to the wholesale market, abandoning PPAs.


There have been concerns about price competition risks in the renewable energy market, the report said. Solar capacity exceeds demand in some markets, most notably in Sicily. This could lead to "reduced revenue for developers and uneconomical purchases for buyers".


The P25 index of solar quotes in the second quarter rose by 19.1% to €59.43/MWh, almost €10 higher than in the first quarter of 2022. Markets remained relatively stable in Spain and Finland, where the solar P25 index fell even slightly (2.6%).


The problems affecting European PPAs will also persist for some time, with Sørensen saying that "there is no clear end in sight" as the root causes of the imbalance could take many years to resolve.


Sørensen added: "Due to approval and grid connection difficulties, input costs and labor costs, developers continue to work hard to build new solar and wind projects that we desperately need."




Similar issues are being felt in the North American market, especially after the US Department of Commerce's anti-dumping/countervailing investigation. Solar projects have been plagued by insufficient supply of PV modules, and PPA prices across the Atlantic have been rising.


PPA prices have continued to rise over the past two years. In the second quarter of 2022, P25 solar and wind energy PPA reached US$41.92/MWh, an increase of 5.3% from the previous quarter and an increase of more than 30% year-on-year.


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