Offer prices for wind power power purchase agreements (PPAs) across Europe were cheapest in Sweden in the third quarter of the year, according to new analysis.
Meanwhile, PPA offer prices continued to be significantly higher for wind than for solar, with the former getting more expensive in Q3, while the latter fell in price.
Offer prices for wind rose 8.3% from the previous quarter to €48.40/MWh, while prices for solar dipped 0.3% to €42.30/MWh, according to LevelTen Energy which recorded the prices offered by wind and solar developers in 15 European countries.
LevelTen Energy compared the most competitive 25th percentile offer prices, meaning the cheapest 25% of offer prices made in each market.
Wind PPA prices by country
Kyle Harrison, a senior associate at BloombergNEF, reacted to LevelTen Energy’s report, saying: “Strong wind resources and naturally high capacity factors make Sweden the cheapest in Europe.
“While they will continue to outcompete other markets, the retirement of Swedish nuclear plants in the coming years could drive power prices up, in turn increasing PPA prices.”
LevelTen noted that the low market price of electricity in Europe as well as availability of attractive financing options in northern Europe played a role in Swedish wind power’s low prices. These factors also contributed to neighbouring Denmark having the lowest offer prices recorded for solar (€31/MWh).
LevelTen Energy’s vice president of developer relations, Rob Collier explained France’s high PPA prices in the last quarter: “In France, the combination of difficult and rigid permitting processes, lack of viable new sites for large-scale, economically-competitive projects, and the state-sponsored contract for difference scheme, put upward pressure on PPA prices.”
The analysts believe that renewable energy PPA prices will stabilise in the coming years.
Collier added: “Although renewables will continue to be the most cost-effective form of generation, it’s expected that the levelised cost of energy (LCOE) for renewables will stabilise as hard cost improvements become incremental, and siting and permitting become more challenging.”