LevelTen Energy: Europe’s Renewable PPA Prices Declined 2% in Q4 as Solar Supply Chain Stabilizes

LevelTen Energy, operator of the world’s largest power purchase agreement (PPA) marketplace, has released its 2023 Q4 PPA Price Index report, which shows that during that quarter, LevelTen’s market-averaged blended index of wind and solar 25th Percentile (P25) PPA prices decreased 2% across Europe. P25 solar prices declined 3% and P25 wind prices declined 1%. 

“After a years-long period of rising PPA prices, buyers understandably can grow excited when PPA price declines are reported — no matter how moderate their nature. Seeing some easing of upward price pressure is encouraging,” said Plácido Ostos, Director, European Energy Analytics at LevelTen Energy. 

European solar PPA Prices continue to moderate 
“P25 Solar PPA prices across Europe went down 3% during Q4 2023, reversing Q3’s rising trend,” said Ostos. “The supply chain problems of the past few years are improving, contributing to a global oversupply of solar panels,” he said. 

Wind PPA prices dip slightly
Market-Averaged P25 prices for European wind PPAs decreased by 1% during Q4. “This trend in the continental index was influenced in part by the loss of higher-priced markets that were present during Q3, like France and the UK,” Ostos said. “By and large, wind development in Europe continues to be an uphill venture, as high component prices, lingering inflation impacts, high interest rates, and low site availability collectively take their toll,” he said. 

P25 solar prices decreased across much of Europe, with Italy, UK exceptions 
Solar prices exhibited a modest overall decrease in Q4, likely due to increased supply chain stability. Romania saw a significant 11% reduction, driven by heightened local competition as a growing number of PPA offers bring economies of scale. In Q4, P25 solar prices in Spain decreased by 7%, Portugal by 6%, and Germany by 5%. 

Finnish wind decreased 5% amid low European wind inventory
During Q4, Finland experienced a noteworthy 5% decrease in P25 wind prices. Spain’s P25 wind price increased 1% and Romania witnessed a 2% increase. A lack of offer liquidity, including the absence of traditionally active markets like the UK, contributed to a varied pricing picture across the continent. “Looking ahead, regulations from the European Commission should improve permitting processes for wind projects, but seeing their impacts will take time,” said Ostos. 

Continued high demand makes now a good time to procure 
“It’s encouraging to see a slight decrease in PPA prices this quarter, as the impacts of a normalizing solar supply chain begin to be incorporated in PPA pricing. There is also growing optimism that high interest rates from the European Central Bank have reached their peak and are poised to begin coming down,” said Ostos. 

“While these supply chain and interest rate developments are welcome news, demand for PPAs — and renewable energy more broadly — is set to remain high. As economy-wide electrification efforts continue and Europe’s burgeoning green hydrogen sector expands, demand for clean energy capacity is expected to grow significantly in the coming years. PPA buyers are encouraged to prioritize preparation and transactional efficiency to lock in good deals quickly,” he said. 

Download the free executive summary or full report
Visit www.leveltenenergy.com/ppa to download the free executive summary or purchase the full report. LevelTen’s report helps renewable energy developers, buyers and financiers navigate the PPA market with data from real PPA price offers and expert insights. Contact datasolutions@leveltenenergy.com to learn more.
*LevelTen’s P25 Price Index represents 25th percentile PPA prices. All PPA price data in LevelTen’s report are based on the prices that developers are offering for PPA contracts, not transacted PPA prices.

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