Italy has taken over the top spot as Europe’s most active market for renewable power purchase agreements (PPAs) with the highest proportion of price offers under development as deals in Spain and the UK fell back, likely due to new offers of government support in those two markets, according to clean energy platform LevelTen Energy.

Flemming Sørensen , vice-president of Europe at LevelTen, said the UK government’s commitment to support up to a doubling of the capacity to be made available in next years contract for difference auction and Spain’s recent €181m ($214m) injection of state funds into renewables projects in seven regions “may have impacted on PPA offers in both countries as developers reassess their options”.

LevelTen’s ‘Energy PPA Price Index’ for the third quarter of 2020 shows the number of price offers in Italy comprised 26.7% of the total, compared to Spain with 23.9% and the UK with 14.4%. This compares to the previous quarter when Spain had the highest proportion, and Italy was in fourth place with 11% of the total.

Will Jolley, director of technical sales at LevelTen, cited “high wholesale electricity prices” as one of the reasons for the attractiveness of the Italian market. “While Spanish solar tends to be more evenly distributed throughout the country, Italian offers are highly concentrated in Sicily, Puglia, and Basilicata.”

Low nordic prices

The report found that Denmark had the lowest offer prices for solar at €31/MWh, while Sweden had the lowest offer prices for wind, at €29/MWh. Italian solar also displayed the greatest decrease in prices during the period.

LevelTen said quarter-over-quarter, European markets saw a similar trend in wind prices as in the US, with the P25 index [aggregate price comparison] of wind offer prices increasing by 8.3%. The P25 Index for solar prices decreased slightly.

The lowest P25 wind prices were found to be in Sweden, Finland and Lithuania, while the lowest solar prices were in Denmark, Sweden and Spain

The index analysed data on 440 price offers from 180 renewable energy projects in 15 countries across Europe.

“While it’s easy to see how Spain’s sunny climate would encourage solar development, driving competition and lowering prices, Denmark and Sweden aren’t exactly sunny locales,” said Sørensen .

“What they do have is a high penetration of renewables thanks to a proliferation of existing wind projects, which lowers the market price of electricity and therefore lowers PPA price offers.

“Another factor may be financing: incentives for renewable energy investments, lower hurdle rates in Northern Europe, and the view that Nordic renewables are relatively low risk investments have made it easier and cheaper to secure financing that in southern Europe.

“In addition, the introduction of mortgage lending has provided an innovative solution to finance renewable projects in Denmark.”

LevelTen’s platform contains more than 3,800 renewable energy PPA offers from over 1,100 projects under development. More than 350 international developers have uploaded to the LevelTen’s marketplace, covering 21 countries across Europe and North America.

Figures from RE-Source, a joint platform set up by advocacy bodies WindEurope, SolarPower Europe, the RE100 and the World Business Council for Sustainable Development, in March showed that corporate wind and solar power sourcing in the EU grew by a further 2.6GW last year, taking the total capacity of renewable PPA’s to date in the region to over 8GW.

Transition

Italy Europe's PPA hot-spot as Spain and UK cool: report