The persistent energy crisis pushed up the price of renewable energy PPA in Europe by 8%

The persistent energy crisis pushed up the price of renewable energy PPA in Europe by 8%

With the deepening of the European energy crisis, the price of renewable power purchase agreement (PPA) continued to rise in the last quarter, pushing the wholesale electricity price to a new high. Levelten energy, a supplier of renewable energy trading infrastructure, said that from the third quarter to the fourth quarter, the overall price index of European solar and wind energy PPA price quotations increased by 7.8%, of which the cheapest 25% transactions reached 52.46 euros / MWh, with a quarterly increase of 3.78 euros.

According to levelten energy's PPA price index report in the fourth quarter of 2021, as of the end of last year, the price pressure continued to rise for the third consecutive quarter, with a cumulative increase of 17.4% in the nine months since March. There are many reasons behind the decline of PPA supply and price rise, including macroeconomic and regulatory challenges including the energy crisis, as well as supply chain constraints, inflation, rising commodity costs and more and more government renewable energy bidding. As a result, Europe's P25 index reached 52.46 euros / MWh.

Price index comparison. Source: levelten

Fred carita, European developer service manager of levelten energy, said that due to the high wholesale prices, selling energy to the wholesale electricity market is an increasingly attractive option for renewable energy developers. "Developers are raising their PPA prices to make up for the revenue they would have received from selling a larger proportion of electricity in the day ahead market."

A large number of low-cost hydropower enables Nordic countries to resist the pressure of rising prices, but not all Nordic countries are unaffected. Importing electricity from Denmark makes Sweden vulnerable to German wholesale electricity and PPA prices. In particular, southern Sweden is more vulnerable to the trend of the central European market. The P25 wind power price of the country increased by 24% in the fourth quarter to 36.48 euros / MWh.

However, despite all kinds of adverse factors, according to the data of industry organizations, the renewable energy capacity of PPA agreements signed in Europe each year increased by 69% from 2020 to 2021, including non-standard contract structure, such as uplink sharing above the set price ceiling; Delay the commencement of the contract; Market indexed power purchase agreements are becoming more and more popular.

"The good news is that the PPA agreement is still being completed," said Rob collier, vice president of levelten. "Contract innovation tailored to current market conditions is leading to successful PPA transactions. And so far, buyers have not been affected by market conditions, which means there is still a lot of demand in the market."