European renewable Power Purchase Agreement prices have surged 8.1% quarter over quarter and 27.5% year on year, with the crisis in Ukraine the latest development in the deepening energy crisis according to LevelTen Energy’s ‘European Q1 2022 PPA Price Index’, released on 13 April. Despite this uncertainty, demand for renewables has remained strong, leading to a shortage of projects for buyers.
As the war in Ukraine further deepens Europe’s energy crisis, PPA prices have continued to climb for a fourth consecutive quarter. Year on year, European P25 solar and wind prices (the P25 Index is an aggregation of the lowest 25% of wind and solar PPA offers) have increased 27.5%, exacerbated by unusually high natural gas prices compounding existing regulatory challenges and supply chain constraints.
Despite the dynamic conditions of the market, LevelTen Energy’s survey of leading sustainability advisories found that 55% of utility scale renewable energy buyer’s procurement timelines are unchanged, while 20% are accelerating theirs.
This buyer appetite is quickly creating an imbalance between demand for renewables and supply, as developers struggle to match the pace of demand due to a combination of supply chain, interconnection and regulatory challenges. In Spain, more than 73 GW of solar projects are in the pipeline to be constructed, but only 18.6% have received appropriate permitting.
European governments, notably Germany and Italy, have taken steps to streamline challenging permitting processes, but it will take time for these to be reflected in the market. Italian P25 solar prices increased by nearly 23% year on year, and German P25 solar PPA prices by 25% in a year.
• The Index series created by analysts levelTen energy, analyses over 4000 wind and solar pricing offers listed on the LevelTen Marketplace across 21 countries in Europe and North America.