Prices for European power purchase agreements (PPAs) for green electricity fell by 12.4 percent in the third quarter of 2024 compared to the same period in 2023, according to data from price tracking platform LevelTen. This decline is attributed to decreasing inflation and reduced market volatility following the COVID-19 pandemic and the 2022 energy crisis.
LevelTen’s quarterly report highlighted the stabilizing market conditions, suggesting that now could be an opportune time for buyers to secure long-term deals. “The variety of offtake opportunities available to potential PPA buyers has perhaps never been greater,” the report noted, signaling an expanded range of purchasing options across the European market.
PPAs are critical agreements between corporate energy users and renewable energy developers, particularly solar and wind project operators. They offer a stable revenue stream for developers, facilitating financing and contributing to the European Union’s goal of sourcing at least 42.5 percent of its electricity from renewables by 2030.
Despite the general price decline, the impact on household energy costs remains uncertain. However, policymakers believe that increased adoption of green power should eventually lead to lower costs for consumers.
The report also indicated a regional disparity in PPA prices, with central and eastern Europe seeing a rise in project developments. In Ireland, solar projects surged, contributing to a slight 1.3 percent quarterly increase in solar PPA prices, while prices in Hungary and Italy also pushed solar higher.
Challenges remain in the wind sector, which has been hampered by supply chain issues and inflation. Notably, Belgium, France, Greece, Ireland, Italy, and Portugal did not contribute prices to LevelTen’s index for the third quarter. However, the overall index for wind and solar projects showed a decrease in the 25 percent most competitive PPA prices, dropping to €76.17 per megawatt-hour (MWh) from €86.94 a year earlier.
The report also pointed to easing interest rates and positive political signals, particularly in Britain and Germany, where wind capacity auctions have bolstered developer enthusiasm for future projects. The typical PPA term length remains 11 years, with prices settled against hourly day-ahead wholesale market prices.