European renewable energy prices fall 12.4% in Q3

Level Ten Energy said on Thursday that European renewable energy purchase agreement (PPA) prices fell by 12.4% in the third quarter of 2024, compared to the same period in 2023. The platform attributed this decline to the decline in inflation in the European continent, the decline in market volatility and other factors that have increased in recent years.

The platform said in its quarterly report, “With the current relative stability of the market, it may be wise for buyers to enter the market soon to secure the deals they need,” adding, “We may never have had the current diversity and abundance of opportunities available to buyers.” Power purchase agreements (PPAs) are long-term agreements between corporate energy users and solar and wind project developers, ensuring that companies are supplied with enough renewable energy to meet EU requirements that renewables account for at least 42.5% of total energy used in projects by 2030.

For developers, PPAs provide a revenue stream, making it easier for them to access financing to start and sustain their projects.

The impact of these cheaper deals on household consumers is yet to be seen, although policymakers say increased adoption of green energy will eventually lead to lower prices.

Despite the overall decline in prices, Level Ten Energy notes a significant pricing gap across Europe, with projects expanding in central and eastern Europe and solar in Ireland, while supply chain disruptions have hampered the wind sector.

The average index price of power purchase agreements for newly added capacity in July-September across 22 European countries fell to €76.17 ($82.97) per megawatt-hour, from €86.94 a year ago and €77.21 in the second quarter of 2024.

Level Ten Energy said lower interest rates should make financing for renewable projects easier, and that appetite for development was also boosted by supportive economic policies in the UK and wind auctions by the German government.

Power purchase agreements typically last for 11 years, and prices are settled at wholesale market prices for each hour of the day.