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LevelTen Releases Q3 2020 PPA Price Index Reports for North America and Europe

Market Insights
October 15, 2020

Today LevelTen Energy released its Q3 2020 PPA Price Index reports for North America and Europe, delivering the industry's most comprehensive analysis of actual PPA price offers in 16 renewable energy markets across the globe. Here are just a few highlights: Fill out the forms below to download the full reports.

PPA Prices Rising in North America

In North America, LevelTen's report reveals that PPA offer prices are on the rise for both wind and solar projects. After dropping continuously for six quarters, the 25th percentile (P25) index of solar offer prices has risen for the past two quarters, and at $29.30 per megawatt hour (MWh), it has surpassed its previous recorded high of $29.20/MWh back in Q3 2018. The P25 index of wind prices has been trending upward for the past two years, and jumped 9% this quarter to a new high of $30.60/MWh. Historically, the P25 index of wind offer prices has been lower than that of solar; the first time it rose above the solar index was Q1 2020. This quarter, it rose higher than solar once again.

"LevelTen continues to believe that we're seeing the impact of the step down in production tax credits in our Price Index. Wind developers got a bit of relief at the end of 2019 when Congress extended PTC eligibility to wind projects that started construction in 2020, and this spring when - as part of COVID relief - the IRS extended the placed-in deadlines from 4 to 5 years. Even so, the number of 100% and 80% PTC-eligible projects that are still available for PPA contracting is dwindling," said Rob Collier, Vice President of Developer Services, LevelTen Energy. "With lower PTC eligibility, developers must make up project revenues in their PPA prices. Despite these increases, we want to underscore that we still see wind, and renewables in general, as being the most competitive form of generation for the future."

Rising demand can also put upward pressure on prices, especially in areas where supply can't keep up. In this quarter's developer survey, LevelTen wanted to understand the most important factors impeding developers from building new projects where demand is high. "Grid connection delays" and "permitting challenges" were the top two factors selected by respondents. In areas where the demand outpaces supply, 73% of respondents said they anticipate that PPA prices will increase on average.

"Renewable energy buyers should be aware that it may be a buyer's market in many places now, but as more companies, utilities and governments commit to renewable energy, we're already starting to see the pendulum swing to a seller's market. As a result, though renewables will continue to be the most competitive form of generation, we expect PPA prices will rise. Those with 2030 goals (or sooner) may benefit from locking in contracts today," said Collier.

To download the full North American report, including PPA prices by ISO and hub, fill out the form below.

Italy Eclipses Spain and the UK in Proportion of Offers on LevelTen Marketplace

This quarter, Italy eclipsed Spain and the UK to become the most active market on the LevelTen Marketplace, with the highest proportion of PPA price offers of all countries included in this quarter's report. The number of offers in Italy represented 26.7% of the total: Last quarter, Spain had the highest proportion, and Italy was fourth place, at 11% of total.

The drop in offers in Spain and the UK could be related to recent government commitments. "UK Prime Minister Boris Johnson recently committed to supporting up to double the capacity of renewable energy in the next Contracts for Difference auction, which will open in late 2021, and in September Spain said it will inject 181 million euros of state funds into renewable energy projects in seven regions. These announcements may have impacted offers in both countries, as developers reassess their options," said Flemming Sørensen, LevelTen Vice President of Europe.

Quarter-over-quarter, European markets saw a similar trend in wind prices as in the United States, with the P25 Index for wind projects increasing 8.3%. The P25 index of solar prices decreased slightly, at 0.3%. The lowest P25 wind prices were found in Sweden, Finland and Lithuania, and the lowest solar prices were found in Denmark, Sweden and Spain.

"While it's easy to see how Spain's sunny climate would encourage solar development, driving competition and lowering prices, Denmark and Sweden aren't exactly sunny locales. What they do have is a high penetration of renewables thanks to a proliferation of existing wind projects, which lowers the market price of electricity and therefore lowers PPA price offers," said Sørensen. "Another factor may be financing: incentives for renewable energy investments, lower hurdle rates in Northern Europe, and the view that Nordic renewables are relatively low risk investments have made it easier and cheaper to secure financing than in Southern Europe. In addition, the introduction of mortgage lending has provided an innovative solution to finance renewable projects in Denmark."

To download the full European report, including PPA prices by country, fill out the form below.

Beginning with the Q1 2022 PPA Price Index Reports, we have expanded these reports to provide you:

  • More PPA price data (P10, P25, P50, P75, P90) to give you a better picture of what a competitive offer looks like (both reports)
  • Projected capture price trend to help you understand how forward markets have changed (North America report)
  • Price changes by country and technology (Europe report)
  • Expanded expert analysis and much more (both reports)

Click here to learn more about the data and market intel included in the expanded PPA Price Index Reports.

LevelTen Energy

LevelTen Energy is the leading provider of renewable transaction infrastructure, delivering the marketplaces, software, automated analytics, and expertise required to accelerate clean energy transactions. The LevelTen Platform is the world’s largest online hub for renewable energy buyers, sellers, advisors, asset owners and financiers. The Platform includes the LevelTen Energy Marketplace, which delivers access to more than 4,500 power purchase agreement price offers spanning 28 countries in North America and Europe. It also includes the LevelTen Asset Marketplace, which brings together over 800 renewable energy project developers and owners, and delivers the online tools and expertise they need to buy, sell and finance assets quickly. Together, LevelTen and its partners share #OneGoal to accelerate the energy transition.