European wind prices have continued to rise, as project developers face permitting barriers and rising costs that have pushed up prices by 35% over the last six months, according to LevelTen Energy’s Q1 PPA Price Index.
Solar PPA prices in Europe, however, have dropped for the first time in two years,
LevelTen’s report tracks clean energy price movements across 20 European countries, using price indices based on PPA offers uploaded to the LevelTen Energy Marketplace by wind and solar project developers.
In Q4 2022, LevelTen was unable to produce a wind index because there were not enough wind offers available to anonymize the data; a clear sign of the challenges wind developers faced in bringing new projects to the market, and the paralysis brought by the regulatory turmoil in the last quarter of 2022, according to the report.
However, there was a resurgence of wind offers on the LevelTen Energy Marketplace in Q1, including offers from projects in France, the UK and Romania.
These markets have higher wind prices than Sweden and Spain, which were also included in the wind index this quarter.
In the six months between Q3 2022 and Q1 2023, P25 wind PPA price offers in Europe rose by 35% to €106.06 per megawatt hour, though this number is impacted by the re-emergence of the higher priced markets on the index.
In addition, LevelTen’s 25th Percentile (P25) index of solar prices dropped slightly quarter over quarter, decreasing 4.7% to €73.20 per MWh.
The drop is a noticeable change from the skyrocketing prices the solar industry has been experiencing for the past two years; Q1 2023 solar prices sit at 47% higher than Q1 2022, and 76% higher than Q1 2021, the report found.
LevelTen’s overall index of wind and solar PPAs across European markets rose 56% year over year, sitting at €88.88 per MWh.
On a regional basis, all markets except Spain experienced solar price drops.
“There are several reasons for this drop,” said senior energy analyst for Europe at LevelTen Energy Placido Ostos.
“A primary driver is the fact that supply chain difficulties brought by the pandemic are abating as manufacturers ramp up production and logistical challenges resolve.
“Also, the gradual decline in inflation, although compensated by higher interest rates, is providing developers with improved visibility into their capex costs, which means fewer uncertainties to factor into PPA prices.
“In addition, the drop in natural gas and wholesale electricity prices is adding pressure to developers to decrease their PPA prices in order to remain a competitive option for buyers.”