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% and 14% of the total, respectively. According to the analysts of Level Ten Energy there are many reasons why Spain is an active market, including resource availability (plenty of sun), the availability and cost of land, trust in the regulatory environment and subsidy schemes, as well as low construction costs.
€38/MWh index price for solar
The 25th percentile (P25) pan-European index price was €38/MWh for solar and €31/MWh for wind. This quarter’s report sets a baseline: In future reports LevelTen will track the percentage that the indices change over time. There was significant variation of the wind and solar indices among countries, which can be attributed to factors like regulatory conditions, commercial operation date (COD) ranges, and regional differences in resource availability and development costs.
Solar PPAs smaller range of offer prices than wind
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 €40,33/MWh versus €21,90/MWh for solar.
Stimulus efforts may not impact corporate PPAs
The report also explores current trends in the industry, and this quarter all eyes were on the COVID-19 stimulus efforts, particularly 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% – 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,” said Heggarty.
Corporations reducing their carbon footprint through renewable PPAs
“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 Tundermann. (hcn)
