European renewable PPA prices surged 8.1% quarter over quarter and 27.5% year over year, with the crisis in Ukraine the latest development to the deepening energy crisis, according to LevelTen Energy’s European Q1 2022 PPA Price Index, released today. Despite this uncertainty, demand for renewables has remained strong causing a shortage of projects for buyers.
The Index series, created by LevelTen Energy, a provider of renewable transaction infrastructure, analyses over 4,000 wind and solar pricing offers listed on the LevelTen Marketplace across 21 countries in Europe and North America.
· As the war in Ukraine further deepens Europe’s energy crisis, PPA prices continue to climb for a fourth consecutive quarter. Year-over-year, European P25 solar and wind prices have increased 27,5%. exacerbated by sky-high natural gas prices compounding existing regulatory challenges and supply chain constraints.
· Despite the dynamic conditions of the market, LevelTen Energy’s survey of leading sustainability advisories found that 55% of utility scale renewable energy buyer’s procurement timelines are unchanged, while 20% are accelerating theirs.
· This buyer appetite is quickly creating an imbalance between demand for renewables and supply, as developers struggle to match the pace of demand due to a combination of supply chain, interconnection and regulatory challenges. In Spain, more than 73 GW of solar projects are in the pipeline to be constructed, but only 18.6% have received appropriate permitting.
· European governments have taken steps to streamline challenging permitting processes, including Germany and Italy but it will take time for these to be reflected in the market, Italian P25 solar prices surged by nearly 23% year over year and German P25 solar PPA prices increased 25% year-over-year.
· The report also highlights issues linked to permissions and clearances that have delayed the push for renewable energy in the continent.
· Italy, which has the second largest share of European PPA offers on LevelTen’s Energy Marketplace (27%). The country’s onerous and lengthy permitting process has made it challenging for developers to build fast enough to keep up with the demand. Italian lawmakers changed environmental review procedures last year in a bid to streamline and speed up the process, but it will take time to see these changes reflected in the market. Italian P25 solar PPA prices have soared more than 23% year-over-year, and currently sit at 51.5€ per MWh.
· In Germany, permits for onshore wind projects can take around five years to secure, and there is limited land available for development. Recognizing the need to ease regulatory constraints, German lawmakers have taken steps to streamline the permitting process and set aside 2% of land for wind energy projects. Previous regulatory reforms helped catalyze Germany’s solar industry. German P25 solar PPA prices increased 25% year-over-year, and now rest at 60€ per MWh.
· In Spain, more than 73 GW of solar projects are in the pipeline to be constructed and connected to the grid, but only 18.6% have received environmental and construction authorization, according to Spanish Solar PV industry group UNEF. Spanish P25 solar prices increased 11,8% year-over-year, and now rest at 38€ per MWh.