Wind and solar PPA prices surge as demand grows during energy crisis

European renewable power purchase agreement (PPA) prices surged 11% quarter-over-quarter and 51% year-on-year as large energy consumers tried to insulate themselves from high energy prices with long-term, fixed-price energy contracts.

The data is from the European Q3 2022 PPA Price Index, covering July to September 2022, published by LevelTen Energy.

The renewable transaction infrastructure firm said wind P25 PPA prices increased by 8% to €78.50/MWh, while solar PPAs jumped 15.4% to €68.57/MWh.

LevelTen’s P25 Price Index represents an average of the 25th percentile PPA price from each market.

PPA demand remains strong despite rising prices. 

“Corporations can use PPAs to stabilise their energy costs, meet their emissions reduction targets, and demonstrate their commitment to sustainability and energy independence,” said Flemming Sørensen, vice president, Europe, LevelTen Energy. 

He added: "The challenge is that supply can’t keep up because of permitting and interconnection issues. And now, because of high wholesale electricity prices, developers have more options to finance their projects outside of PPAs, which further limits supply.”

LevelTen Energy notes concerns regarding the UK's electricity market review and some uncertainty following the EU's temporary €180/MWh price cap on wind and other renewable generators from 1 December 2022 to 30 June 2023. 

However "hope is on the horizon" for wind PPAs, Sørensen said, noting that “EU initiatives to reform and accelerate the renewables permitting process should, over time, provide some relief”.