Sweden and Spain have cheapest corporate PPA prices in Europe

Duke Energy Renewables

Sweden and Spain respectively have the cheapest average corporate PPA prices in Europe for wind and solar electricity, according to BloombergNEF’s (BNEF) 1H 2020 European Corporate PPA Price Survey.

The lowest price levels for onshore wind corporate PPAs in Europe are available in Sweden at 30.50 EUR/MWh.

Solar PV shows its lowest price levels in Spain at 35.30 EUR/MWh, but is generally more expensive across the region than wind. The report reveals big differences in renewable energy PPA prices across Europe.

“The gap between the cheapest PPA you might sign in Sweden and the most expensive PPA in the U.K. being over 30 euros per MWh,” Helen Dewhurst, an analyst at BloombergNEF and the author of the report, said.

PPA prices are not static and depend on many variables, so there is never just no one market price.

In addition to technology, changes in PPA contract terms can have a significant impact on price. For example, annual baseload contracts for round-the-clock power are between 1.5 and 3.5 euros per MWh more expensive on average than standard pay-as-produced deals that directly track renewable output. The extent to which volume has an impact on price generally increases in inverse proportion to project size.

Term length is another key determinant of corporate PPA pricing. In Europe, a 1.5-2.5 EUR/MWh premium is typically charged for 15-20 year terms, compared with more standard 10-15 year terms.

This is a key distinction between Europe and the U.S. – the world’s largest corporate PPA market (with 40.4GW activity, compared to 9.8GW in Europe) – where longer deal terms attract a discount.

“Nearly half of the world’s RE100 companies are based in Europe – we know the demand for clean energy is there. But for PPA activity to scale up to U.S. levels, more light needs to be shined on regional nuances around contract pricing, structure and term length,” Kyle Harrison, a BNEF analyst specializing in corporate sustainability, said.