Italy has emerged as the EU market with the highest demand for renewables power purchase agreements, according to clean energy transactional platform LevelTen Energy.
LevelTen’s third quarter 2020 PPA Price Index found Italy has become the most active market on its EU platform, with the highest proportion of PPA price offers of all countries included in this quarter’s report, representing 26.7% of the total.
Italy moved up from fourth place last quarter, overtaking Spain which had the most and also the UK.
The index analysed data on 440 price offers from 180 renewable energy projects in 15 countries across Europe.
The report found Denmark had the lowest offer prices for solar, at €31 per megawatt-hour and Sweden had the lowest offer prices for wind, at €29/MWh.
Low market price of electricity and attractive financing options could be contributing factors to the price trend, LevelTen said.
LevelTen Europe vice president Flemming Sorensen (pictured) said: “UK Prime Minister Boris Johnson recently committed to supporting up to double the capacity of renewable energy in the next Contracts for Difference auction, which will open in late 2021, and in September Spain said it will inject €181m of state funds into renewable energy projects in seven regions.
“These announcements may have impacted offers in both countries, as developers reassess their options.”
Quarter-over-quarter, European markets saw a similar trend in wind prices as in the United States, with the P25 Index for wind projects increasing 8.3%. The P25 index of solar prices decreased slightly, at 0.3%.
The lowest P25 wind prices were found in Sweden, Finland and Lithuania, and the lowest solar prices were found in Denmark, Sweden and Spain.
Sorensen added: “While it’s easy to see how Spain’s sunny climate would encourage solar development, driving competition and lowering prices, Denmark and Sweden aren’t exactly sunny locales.
“What they do have is a high penetration of renewables thanks to a proliferation of existing wind projects, which lowers the market price of electricity and therefore lowers PPA price offers.
“Another factor may be financing: incentives for renewable energy investments, lower hurdle rates in Northern Europe, and the view that Nordic renewables are relatively low risk investments have made it easier and cheaper to secure financing than in southern Europe.
“In addition, the introduction of mortgage lending has provided an innovative solution to finance renewable projects in Denmark.”