According to LevelTen, a price tracking platform, European power purchase agreement (PPA) prices for green electricity dropped by 12.4% in Q3 2024 compared to the same period in 2023.
This decrease is attributed to declining inflation and reduced market volatility following the COVID-19 pandemic and the 2022 energy crisis.
LevelTen’s quarterly report suggests that current stable market conditions present an opportunity for buyers to secure favourable deals. The variety of offtake opportunities for potential PPA buyers is reportedly at an all-time high.
PPAs, which are long-term contracts between corporate energy users and solar and wind developers, help meet the EU’s target for at least 42.5% of electricity to come from renewables by 2030. These agreements provide developers with predictable income, aiding project financing.
Although the impact of these price reductions on household consumers remains unclear, policymakers assert that increasing green power supply will ultimately reduce costs. The report highlighted a significant regional disparity, with central and eastern Europe expanding projects, and solar developments surging in Ireland. Supply chain challenges and inflation have hindered the wind sector, and no prices were reported from Belgium, France, Greece, Ireland, Italy, and Portugal for Q3.
The 25% most competitive PPA prices for new capacity averaged 76.17 euros ($82.97) per MWh in Q3, down from 86.94 euros a year earlier, and 1.3% lower than Q2 2024. Solar prices rose 1.3% quarter-on-quarter, driven by higher prices in Hungary, Italy, and newly added Irish data.
LevelTen noted that lower interest rates could facilitate renewable project financing, supported by favourable political developments in the UK and wind capacity auctions in Germany. The typical term length for PPAs is 11 years, with prices linked to hourly day-ahead wholesale market prices.