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European renewable power purchase agreement prices rose 8.1 per cent month-on-month
Release time:
May 09,2022
According to the European Power Purchase Agreement (PPA) Price Index Report for the first quarter of 2022 released by LevelTen Energy, a renewable energy trading infrastructure provider, European renewable energy power purchase agreement (PPA) prices rose by 8.1% month-on-month and 27.5% year-on-year, and the Russia-Ukraine conflict is one of the main reasons for exacerbating the energy crisis. Despite this uncertainty, demand for renewable energy remains strong in Europe.
Created by LevelTen Energy, the index series analyzes more than 4,000 wind and photovoltaic power quotes for 21 countries in Europe and North America.
Key Highlights:
· As Russia's invasion of Ukraine further exacerbates Europe's energy crisis, renewable power purchase agreement (PPA) prices continue to climb for the fourth consecutive quarter. Compared to the same period last year, the price of PV and wind power in Europe increased by 27.5%. Soaring natural gas prices have exacerbated existing regulatory challenges and supply chain constraints.
· Despite the dynamics of the market, the survey found that 55% of utility-scale renewable energy buyers have no change in their purchasing schedules, while only 20% are accelerating.
· Due to the combination of supply chain disruptions, grid interconnections, and regulatory challenges, renewable energy developers are struggling to keep up with demand, and this buyer interest is rapidly creating an imbalance between demand and supply for renewables. In Spain, more than 73GW of PV projects are under construction, but only 18.6% have been licensed accordingly.
· Some countries in Europe, including Germany and Italy, have taken steps to streamline challenging permitting procedures, but these will take some time to be reflected in the market, with PV system PPA prices soaring nearly 23% year-on-year in Italy and 25% in Germany.
· The report also highlights licensing-related issues that have delayed the push for renewable energy in European countries.
· Italy has the second largest share (27%) of the European PPA market. The country's onerous and lengthy licensing process makes it difficult for developers to deploy fast enough to meet user demand. Italy authorities changed the environmental review process last year to simplify and speed up the review process, but it will take some time for these changes to be reflected in the market. The price of PV in Italy has surged by more than 23% year-on-year and is currently at €51.5/MWh.
· In Germany, permits for onshore wind projects can take about five years to obtain, and there is limited land available for development. Recognizing the need to ease regulatory restrictions, Germany lawmakers have wanted to take steps to simplify the permitting process and set aside 2% of the land for the deployment of wind power projects. Previous regulatory reforms have helped boost the PV industry in Germany. The price of PV power purchase agreements (PPAs) in Germany has increased by 25% year-on-year and is currently priced at 60 euros/MWh.
· In Spain, more than 73GW of PV projects are under construction, but only 18.6% have received environmental and construction permits, according to Spain's PV industry group UNEF. The price of PV power purchase agreements (PPAs) in Spain increased by 11.8% year-on-year and is currently at 38 euros/MWh.
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