Currently, medium-term future quotations for natural gas remain at a high level due to the Ukraine war. Energy economics consultancy enervis has published a report on the status quo of market parity for PV and onshore wind in 25 European countries.
Results:
- In 2021, wholesale electricity prices in European markets reached record levels, largely due to sharp increases in natural gas and CO2 allowance prices. Market values of PV and onshore wind were strongly driven by the increase in wholesale electricity prices in the second half of the year.
- In 2021, technology-specific full costs (LCOE) of PV and onshore wind projects increased by 15 to 20 percent compared to 2020, and this price increase was more than offset by higher electricity market revenues in 2021.
- In 2021, 19 GW of renewable energy projects were announced outside of subsidy systems. The non-subsidized RE expansion thus reached the pre-pandemic level of 2019. Onshore wind projects were announced predominantly in Northern Europe and Spain, while offshore wind projects were announced in Northwestern Europe. Spain continues to lead in terms of announced PV PPAs.
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Strategic Implications:
- The enervis report shows that an increasing number of European markets will continue to attract PPA projects in the future. In economically attractive markets, PPA activity and competition are increasing.
- The development of market values is influenced by many different factors, including the price level of fossil fuels, electricity demand development, or the share of renewables in the electricity mix. Increasing shares of renewables reduce revenues in the electricity market in the long term.
Franziska Sicker, Consultant at enervis, comments: "In view of the war in Ukraine, independence from energy imports is becoming increasingly important and will accelerate the expansion of renewable energies. In markets where market parity exists, we expect increasing PPA volumes as well as an increase in auctioned capacities." (hcn)
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