Today LevelTen Energy, the world's largest renewable energy marketplace, released the first LevelTen European PPA Price Index -- the industry's most comprehensive analysis of power purchase agreement (PPA) price offers for renewable projects under development in Europe. The Index tracks the most competitive PPA price offers on the LevelTen Marketplace (those in the 25th percentile), providing insight into the most attractive PPA offers available to renewable energy buyers. This report is the first in the industry to take an in-depth look at actual, transactable offer prices in more than a dozen European nations, and provides analysis on prices by project size, target operation date, and technology (wind and solar).
New Index Provides Deeper Insight into Renewables Industry
The quarterly LevelTen PPA Price Index, which has been published in North America since 2018, provides a unique tool to track how pan-European PPA price offers change over time. Renewable energy buyers and developers will now be able to see how macro-level factors like regulatory changes or increased competition are impacting PPA offer prices, and they can be alerted to changes in each country that may make the market more or less attractive for PPAs. The full text of the European and North American reports can be downloaded on the LevelTen Blog.
"This report would not be possible without the LevelTen Marketplace, which requires developers to submit offers based on a set of standard PPA terms most often requested by corporate buyers. This standardization enables buyers to make an apples-to-apples comparison among projects and enables LevelTen to aggregate the data into a quarterly PPA Price Index," said Jason Tundermann, vice president of business development at LevelTen Energy. "However, the LevelTen Marketplace goes far beyond just showcasing PPA prices; we automatically calculate more than a billion data points daily to give our clients a deep understanding of the expected value, and potential risk, of nearly every PPA offer available in North America and Europe."
Spain and United Kingdom Most Active Markets
Key findings from the Q2 2020 Index include:
- Spain and the United Kingdom had the highest proportion of projects with PPA offers of the 14 countries included in this quarter's report, at 26% and 14% of the total, respectively. There are many reasons why Spain is an active market, including resource availability (plenty of sun), the availability and cost of land, trust in the regulatory environment and subsidy schemes, as well as low construction costs.
- The 25th percentile (P25) pan-European index price was €38/MWh for solar and €31/MWh for wind. This quarter's report sets a baseline: In future reports LevelTen will track the percentage that the indices change over time. There was significant variation of the wind and solar indices among countries, which can be attributed to factors like regulatory conditions, commercial operation date (COD) ranges, and regional differences in resource availability and development costs.
- Wind PPAs had a wider range of offer prices than solar. Looking at the range between the P10 (lowest percentile) and P90 (highest percentile) offer prices, wind PPAs had nearly double the spread at €40,33/MWh versus €21,90/MWh for solar.
Stimulus Efforts May Not Impact Corporate PPAs
The report also explores current trends in the industry, and this quarter all eyes were on the COVID-19 stimulus efforts, particularly the European Commission's "Next Generation EU" fund, which earmarked billions for renewable energy development efforts. According to a survey of developers included in the report, a significant majority - 67% - felt that the fund would have no impact on corporate PPA activity.
Tom Heggarty, principal analyst for the energy transition practice at Wood Mackenzie, agrees with respondents. "The European Council reached agreement on its COVID-19 recovery package in mid-July 2020 - the funding for climate-related investments has been watered-down considerably in comparison to the European Commission's proposals. However, this now needs to pass the European Parliament, and a cross-party group of MEPs is pushing for the reintroduction of stronger climate ambition in the package. We broadly agree with survey participants that we would not expect the package to have a significant impact on the corporate PPA market in Europe," said Heggarty.
"Corporations are joining the call to build back better, but they're also not waiting for governments to act; they're taking it upon themselves to reduce their own carbon footprint by procuring renewable energy through PPAs," said Tundermann. "Despite the economic downturn, LevelTen's clients have pressed ahead with PPAs, and thanks to the LevelTen Marketplace, they can identify PPA and portfolio opportunities that meet their goals faster and with less risk."
Today LevelTen also released the Q2 2020 PPA Price Index for North America, which includes analysis on offer prices in each independent service operator (ISO) region, as well as additional developer survey results.
To download the entire LevelTen PPA Price Index report for Europe, fill out the form below.