Spain has become Europe’s “hottest renewable energy market”, with plummeting solar and wind power purchase agreement (PPA) offer prices this quarter, according to LevelTen Energy’s Q2 2021 PPA Price Index.
The Index series analyses thousands of wind and solar PPA pricing offers listed on the LevelTen Energy Marketplace across 21 countries in Europe and North America.
Spain, which now comprises more than one-third of total European project offers on the marketplace, surpassed Italy for the top spot and saw solar P25 PPA prices fall 10.3% during the second quarter to sit at €30.50, Europe’s lowest.
This follows falls in the first quarter of 2021 of 2.6%.
Spanish P25 wind prices also dropped during the second quarter of this year, by 6.2%.
Conversely, blended second quarter 2021 renewable PPA prices for Europe held largely steady, continuing the trend noted over the previous two quarters.
The Blended P25 Index for European offers on LevelTen’s Energy Marketplace increased 0.9% quarter over quarter, while P25 solar prices rose by 1.9% and P25 wind prices decreased by 0.02%.
LevelTen said the Spanish market’s rapid growth, paired with the precipitous drop in Spanish P25 solar prices, could be “a double-edged sword”.
LevelTen Europe vice president Flemming Sorensen said: “Buyers in the Spanish solar market are growing increasingly concerned over price cannibalisation risks as Spanish solar buildout accelerates.
“Because solar projects only produce during daytime hours, an increasing amount of solar generation also means more projects are competing for daytime electricity demand.
In California, this same phenomenon, sometimes called “solar value deflation”, has resulted in the state’s average wholesale price for solar falling 37% since 2014, Sorensen said.
LevelTen also found that during the second quarter solar prices continued to rise in the UK and Denmark, driven in part by rising wholesale power prices in both countries.
Danish P25 solar prices rose more than 14% during the quarter and have increased 30% year over year, while UK P25 wind prices have risen nearly 18% year-on-year.