European PPA Market: 2020/21 Outlook

The European renewables power purchase agreement (PPA) market is likely to exceed 10GW in 2021, according to report of Pexapark.

After 23 power purchase agreements (PPAs) were signed between January and February, for a total of 2.8 GW, the coronavirus pandemic reached Europe in March 2020 brought the market for unsubsidized photovoltaic and wind power plants to an almost complete standstill

Between March and June, only 14 PPAs, for 644 MW of renewable energy projects were closed across Europe. In the second half of the year, however, the PPA market in Europe recovered and picked up significantly, reaching pre-Covid-19 levels at the end of December. Between July and the end of the year, in fact, 33 new corporate PPA deals were sealed for 3.1 GW of photovoltaic and wind power capacity. In December alone, PPAs for 1.1 GW were concluded.

Overall, PPAs for a total renewable energy capacity of 8.9 GW have been signed in Europe to date. However, the Swiss analysts estimate that the actual market volume is likely to be around 10 GW, as not all deals are known. Corporate PPAs account for around 54%, or 4.8 GW, of the total, which represents an increase of almost 70% compared to 2019. In regional terms, Spain stands out due to favourable prices, with PPAs for a total of 3.4 GW.Spain is set to be a leading market in terms of volume in the coming year, thought it will likely be challenged by the nascent German PPA market which is expected to take off in 2021.

Pexapark also forecasts continued challenges around price and volatility, particularly in markets with a high volume of projects built due to initially favourable prices, without a matching increase in demand. The analysis of the prices for the PPAs in Europe is also interesting. The lowest price, of €35/MWh for a solar-linked PPA, was reported in Spain last year. This is followed by Germany, with prices for electricity purchase contracts averaging €41.61/MWh. The PPA contracts concluded in France and Italy were around €1 per megawatt-hour higher, according to Pexapark. The PPAs themselves varied greatly and were largely dependent on the different country circumstances, technologies, and consumers of renewable electric.

Link to the report – Pexapark.com

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