LevelTen Energy, a renewable energy marketplace, has reported its released the first LevelTen European PPA Price Index, which analyses the power purchase agreement (PPA) price offers for renewable projects under development in Europe.
LevelTen Energy, a renewable energy marketplace, has released the first LevelTen European PPA Price Index, which analyses the power purchase agreement (PPA) price offers for renewable projects under development in Europe.
The report found that Spain and the United Kingdom had the highest proportion of projects with PPA offers of the 14 countries included in this quarter’s report, at 26 per cent and 14 per cent of the total, respectively. Spain is an active market because of the availability of resources, including sun, the cost and availability of land, trust in the regulatory environment and subsidy schemes, as well as low construction costs.
The Index tracks the most competitive PPA price offers on the LevelTen Marketplace (those in the 25th percentile), providing insight into the most attractive PPA offers available to renewable energy buyers.
The 25th percentile (P25) pan-European index price was EUR38/MWh for solar and EUR31/MWh for wind. There was significant variation of the wind and solar indices among countries, which LevelTen says can be attributed to factors like regulatory conditions, commercial operation date (COD) ranges, and regional differences in resource availability and development costs.
Wind PPAs had a wider range of offer prices than solar. Looking at the range between the P10 (lowest percentile) and P90 (highest percentile) offer prices, wind PPAs had nearly double the spread at EUR40.33/MWh versus EUR21.90/MWh for solar.
The Index allows renewable energy buyers and developers to see how macro-level factors like regulatory changes or increased competition are impacting PPA offer prices, and they can be alerted to changes in each country that may make the market more or less attractive for PPA.
The report also explored current trends in the industry including the Covid-19 stimulus efforts such as the European Commission’s “Next Generation EU” fund, which earmarked billions for renewable energy development efforts. According to a survey of developers included in the report, a significant majority – 67 per cent – felt that the fund would have no impact on corporate PPA activity.
Tom Heggarty, principal analyst for the energy transition practice at Wood Mackenzie, agrees with respondents. “The European Council reached agreement on its Covid-19 recovery package in mid-July 2020 – the funding for climate-related investments has been watered-down considerably in comparison to the European Commission’s proposals. However, this now needs to pass the European Parliament, and a cross-party group of MEPs is pushing for the reintroduction of stronger climate ambition in the package. We broadly agree with survey participants that we would not expect the package to have a significant impact on the corporate PPA market in Europe,” says Heggarty.
“Corporations are joining the call to build back better, but they’re also not waiting for governments to act; they’re taking it upon themselves to reduce their own carbon footprint by procuring renewable energy through PPAs,” said Jason Tundermann, vice president of business development at LevelTen Energy. “Despite the economic downturn, LevelTen’s clients have pressed ahead with PPAs, and thanks to the LevelTen Marketplace, they can identify PPA and portfolio opportunities that meet their goals faster and with less risk.”
“This report would not be possible without the LevelTen Marketplace, which requires developers to submit offers based on a set of standard PPA terms most often requested by corporate buyers. This standardisation enables buyers to make an apples-to-apples comparison among projects and enables LevelTen to aggregate the data into a quarterly PPA Price Index,” says Tundermann. “However, the LevelTen Marketplace goes far beyond just showcasing PPA prices; we automatically calculate more than a billion data points daily to give our clients a deep understanding of the expected value, and potential risk, of nearly every PPA offer available in North America and Europe.”
LevelTen has also released the Q2 2020 PPA Price Index for North America, which includes analysis on offer prices in each independent service operator (ISO) region, as well as additional developer survey results.
