Solar PPA prices stable after extended European decline
Publish Time：2024-10-19
Sources：
A new report by LevelTen Energy has shown that the average price of solar power purchase agreements (PPAs) has begun to level out after months of decline in the European market.
In the third quarter of this year, the average solar PPA price in the UK rose by 1.7% to €91.12/MWh (£75.77/MWh). Despite this quarter-to-quarter increase, it is worth noting that this figure represents a year-over-year decline of 7.6% and a significant drop from the late 2022 peak of over £83.16/MWh.
LevelTen Energy attributes the UK solar PPA market’s results to several factors, including the 4 July landslide victory of the Labour Party, an event which the report describes as “ushering in a new government that is far more friendly to clean energy”. The report also notes that the Bank of England is expected to cut interest rates this November, despite choosing not to do so in September, which may increase willingness to invest in the market as financial pressures begin to soften.
Notably, this quarter’s report is the first time that Ireland has been included in the results, signalling the increasing potential of the Irish solar PPA market. Ireland had the highest average solar PPA price among all European ries profiled, with an average price of £101.85/MWh. Notably, this year’s Irish RESS 4 renewables auction was oversubscribed for solar projects, potentially increasing interest for PPA off-takers.
Europe’s solar PPA market
Meanwhile, on the continent, solar PPA prices are finally seeing some welcome stability. The report notes that after solar PPA prices had declined for several consecutive quarters, market-averaged P25 solar PPA prices grew by 1.3% between the second and third quarters of this year, reaching £52.93/MWh.
Much of this change was driven by the signing of higher-priced PPAs in Hungary, Italy and Ireland, and the average price of a solar PPA remains notably lower than the price for wind PPAs, which sits at £73.75/MWh, and for blended PPAs, which averages £63.33/MWh.
The average solar PPA price in the UK sits significantly higher than that of mainland Europe, a fact attributable to a number of reasons. One of these factors is as simple as the weather; as LevelTen director of European analytics Plácido Ostos told our sister site PV Tech exclusively this week: “Let’s assume that it costs the same in Spain and the UK [to install a solar panel], you’re going to get way less in the UK, so you need to increase the price to make up for the lower amount of energy you’re producing.”.
Furthermore, Ostos expressed his optimism for the future stability of the European solar PPA landscape.
“I’m confident that, not that we’re not going to see negative prices or cannibalisation, but [these] are not going to be as dramatic as a lot of people want to think,” said Ostos, surmising that the solar PPA landscape has become, and will continue to be, more stabilised. “People are aware [of this] and taking measures on that.”
This content was collected from the Internet. If you want to it, please contact grace solar management.
