FRANKFURT (Reuters) – European power purchase agreements (PPA) for green electricity fell 12.4% in price in the third quarter compared to the same time in 2023, price tracking platform LevelTen said on Thursday.
It cited factors such as a decline in inflation and market volatility following the COVID-19 pandemic and the 2022 energy crisis.
“With current market conditions relatively stable, buyers would be wise to enter the market quickly to secure the deals they need,” the company said in its quarterly report.
“The variety of offtake (purchasing) options available to potential PPA buyers has perhaps never been greater,” the report said.
PPAs are long-term agreements between business power users and solar and wind energy project developers. They are supply guarantees for suppliers who must meet the European Union (EU) legal requirement that at least 42.5% of electricity must come from renewable sources by 2030.
For developers, PPAs guarantee a revenue stream, making it easier to arrange financing.
The impact of the cheaper deals on regular household consumers is unclear, although policymakers say more green energy will ultimately lower costs.
LevelTen said the period was marked by a large divide between regions, with an expansion of projects in Central and Eastern Europe, as well as an increase in solar projects in Ireland.
Supply chain issues and inflation have hampered the wind sector, with Belgium, France, Greece, Ireland, Italy and Portugal not contributing to prices for the LevelTen index in the third quarter.
The 25% most competitive PPA prices for new construction capacity in July through September in 22 European countries in a market average index fell to 76.17 euros ($82.97) per megawatt hour (MWh) from 86.94 euros a year earlier.
They fell by 1.3% compared to 77.21 euros in the second quarter of 2024.
In the blended wind and solar index, solar showed a 1.3% quarter-on-quarter increase, which LevelTen attributed to higher Hungarian, Italian and newly added Irish prices.
It said lower interest rates should make financing renewable projects easier, and that appetite for development had also been boosted by signs of positive political will in Britain and wind energy auctions by the German government.
The stated PPA terms are generally 11 years. Prices are settled at day-ahead wholesale market prices per hour.[EL/DE]
($1 = 0.9180 euros)
