Pexapark, a Zurich-based renewable energy consultancy, has published its latest report, pointing out a significant drop in European PPA activity in March.
According to the report, Russian invasion of Ukraine is impacting PPA pricing, and Europe might witness highly convoluted power price curves for the rest of the year.
The average price of signed PPAs in March was 77.37 euro per MWh, which was 3% higher than the February average of 74.9 euro. Due to price hikes in the first and second years, Pexaprak added that downside risks exceed possible benefits in PPA pricing.
The report also stated that nine power purchase agreements totaling 400 MW were signed in Europe in March, a significant decline from February, when contracted capacity for unsubsidized renewables totaled 1.3 GW over 18 agreements.
The majority of the new contracts signed in March were with energy-intensive businesses such as chemical and metal producers, as well as mining companies. For instance, Statkraft, Norway’s state-owned renewable energy company, signed a PPA in its own country with Wacker, a German chemical company, and another in Spain with Tubos Reunidos, a Spanish steelmaker.
In the first quarter of the turbulent year, German companies were the most active, with firms like food giant Nestlé and pet store chain Das Futterhaus securing deals. Germany, according to Pexapark, has the economic foundations to become a major PPA market, and it appears that the global financial crisis has accelerated this trend. On the other hand, in the first quarter of this year, Spain ranked second in terms of transaction volume, with four corporate PPAs totaling 936.8 MW signed.
Pexapark also disclosed that during the first three months of the year, the first two energy storage-related PPAs were signed in Europe. The company points to a 10-year arrangement struck by Électricité de France (EDF), a French energy provider, for a 5.1-MW solar park combined with battery storage of 1.7 MW. The project, chosen by German authorities in a tender for innovative projects, will not only be subsidized for part of the plant, but will also receive a fixed tariff under Germany’s Renewable Energy Act (EEG) for a period of 20 years.