A new report from LevelTen Energy has shown that the average price of solar power purchase agreements (PPAs) is starting to stabilize after months of decline in the European market.
In the third quarter of this year, the average PPA price for solar in Britain rose by 1.7% to €91.12/MWh (£75.77/MWh). Despite this quarter-on-quarter increase, it is worth noting that this figure represents a year-on-year decline of 7.6% and a significant decline from the late 2022 peak of over €100/MWh (£83.16/MWh) .
LevelTen Energy attributes the performance of the UK solar PPA market to several factors, including the Labor Party’s landslide victory on July 4, an event described in the report as “ushering in a new government that is friendlier to clean energy.” The report also notes that the Bank of England is expected to cut interest rates in November despite choosing not to do so in September, which could increase willingness to invest in the market as financial pressures starts to decrease.
Notably, this quarter’s report marks the first time Ireland has been included in the results, highlighting the growing potential of Ireland’s solar PPA market. Ireland had the highest average solar PPA price of all European countries profiled, with an average price of €122.50/MWh (£101.85/MWh). Notably, Ireland’s RESS 4 renewable energy auction was oversubscribed for solar projects this year, potentially increasing interest from PPA buyers.
The European PPA market for solar energy
Meanwhile, solar PPA prices on the continent are finally seeing some welcome stability. The report notes that after solar PPA prices declined for several consecutive quarters, market average P25 solar PPA prices rose 1.3% between the second and third quarters of this year, to €63.64/MWh (£52.93/MWh).
Much of this change was driven by the signing of more expensive PPAs in Hungary, Italy and Ireland, and the average price of a solar PPA remains significantly lower than the price for wind PPAs, which stands at €88.7/ MWh (£73.75/MWh), and for mixed PPAs, which average €76.17/MWh (£63.33/MWh).
The average PPA price for solar in Britain is significantly higher than that in mainland Europe, a fact that can be attributed to a number of reasons. One of these factors is as simple as the weather; as LevelTen director of European analytics Plácido Ostos told our sister site PV technology exclusive this week: “Let’s assume it costs the same in Spain and Britain [to install a solar panel]In Britain you will get a lot less, so you have to increase the price to compensate for the lower amount of energy you produce.”
Furthermore, Ostos expressed optimism about the future stability of the European solar PPA landscape.
“I’m confident, not that we won’t see negative prices or cannibalization, but [these] won’t be as dramatic as a lot of people want to think,” Ostos said, assuming that the solar PPA landscape has and will remain more stabilized. “People are aware [of this] and take measures accordingly.”
This article contains excerpts from a larger exploration of LevelTen Energy’s report on our sister site PV Tech, Available exclusively to Premium members.
