Pexapark: European PPA prices up 2.2% in August

The average price of a renewable energy power purchase agreement (PPA) signed in Europe in August reached €46.02/MWh (US$53.1/MWh), up from €45.01/MWh in July, which is equivalent to a 2.2% month-on-month increase.

This is according to the latest figures from Pexapark, which were published last week and attribute some of this change to the manner in which it tracks PPA value, rather than an uptick in prices alone. For instance, the firm completed a “recalibration” of PPA fair values in Great Britain, which found that “offtakers had moderated the risk discounts embedded in their pricing,” yielding higher values for PPAs after the recalibration.

This is particularly impactful for longer-term PPAs—Pexapark notes that ten-year PPAs saw an average price increase of £5/MWh (US$6.74/MWh)—and is reflected in the 4.9% month-on-month price increase in all Great Britain PPAs, the highest growth figure reported by Pexapark.

However, the majority of countries tracked by Pexapark also reported month-on-month increases in average PPA prices, with Germany (2.8%), the Netherlands (2.8%) and Italy (1.6%) all reporting an increase in PPA prices.

Pexapark’s latest figures also show no or marginal changes in PPA prices in three European countries: Spain (no change), France (0.2% increase) and Poland (0.3%). Earlier this month, PV Tech Premium heard from the Institute for Energy Economics and Financial Analysis (IEEFA) Europe’s Jonathan Bruegel about how renewable energy PPAs are popular in Europe as they represent “known costs”, compared to fossil fuel prices, which have fluctuated more dramatically since the start of the current conflict in the Middle East.

Europe signs 14 PPAs in August, down from 24 in July

Pexapark also reported that the number of deals signed in August fell considerably from the previous month—with 14 agreements completed for 335MW of capacity, compared to 24 deals for 1.1GW of capacity in July—and this disparity between the lower availability of PPAs and high demand for power could have contributed to the increase in prices in many countries.

The analyst noted that corporate offtakers continue to dominate the renewable energy PPA space. In July, corporate offtakers accounted for 21 of the 24 deals signed, while in August they accounted for 13 of the 14 agreements. July also saw a “more evenly distributed” mix of renewable energy technologies, while in August, onshore wind power accounted for 64% of the energy generation capacity for which deals have been signed.

Meanwhile, Portugal and the Nordics saw a 1.6% and 1.2% month-on-month decline, respectively, in PPA prices. Earlier this year, WElink Energy Portugal 2, the owner of Portugal’s largest solar PV project, entered administration.

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