European wind prices have continued to rise by 35% over the last six months, as project developers face permitting barriers and rising costs that have pushed up prices, according to LevelTen Energy's Q1 PPA Price Index.
Solar PPA prices in Europe, however, have dropped for the first time in two years. Meanwhile, overall wind and solar PPA prices remain 56% higher year-on-year, sitting at EUR 88.88/MWh.
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 the last quarter of 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 that quarter according to the report.
However, wind developmet PPAs saw a resurgence on the LevelTen Energy Marketplace in the first quarter, 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 the third quarter of 2022 and the first quarter of 2023, LevelTen’s 25th Percentile (P25) index of wind PPA price offers in Europe rose by 35% to EUR 106.06/MWh, though this number is impacted by the re-emergence of the higher priced markets on the index.
In addition, P25 index of solar prices dropped slightly quarter over quarter, decreasing 4.7% to EUR 73.20/MWh.
The report shows a drop in solar prices of 4.7% in 12 months to EUR 73.20/MWh. This is a noticeable change from the skyrocketing prices the solar industry has been experiencing for the past two years. For the first quarter of 2023, solar prices sit at 47% higher than the first quarter of 2022, and 76% higher than the first quarter of 2021.
On a regional basis, all markets except Spain experienced solar price drops.
"There are several reasons for this drop," said Placido Ostos, senior energy analyst for Europe at LevelTen Energy.
“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.”
He went on to day: “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.”
Additionally, Ostos added that the drop in natural gas and wholesale electricity prices is adding pressure to developers to decrease their PPA prices to remain a competitive option for buyers.