LevelTen Releases Q2 2020 PPA Price Index, Including the First Price Index of Transactable European PPA Offers

PPA Price Index

LevelTen Releases Q2 2020 PPA Price Index, Including the First Price Index of Transactable European PPA Offers

July 27, 2020

Two years ago, we launched the LevelTen PPA Price Index, the first (and only) index of actual power purchase agreement (PPA) price offers for renewable energy projects under development in North America. The report brought an unprecedented level of clarity to the market, and quickly became a must-read for renewable energy buyers and developers each quarter. Today, we’re pleased to announce that LevelTen is again bringing that same level of innovation and transparency to the European market with the launch of our first European PPA Price Index. Rather than historical RFP pricing, or industry estimates, this report will provide the industry’s most comprehensive analysis of actual, transactable PPA price offers in Europe. You can read more about our first report in the press release.

We’ll be publishing the LevelTen European PPA Price Index alongside our North American report every quarter. To download the full reports for Q2 2020, fill out the forms below.

Here are a few highlights from each:

LevelTen European PPA Price Index Key Takeaways

  • Spain and the United Kingdom had the highest proportion of projects with PPA offers of the 14 countries included in this quarter’s report, at 26% and 14% of the total, respectively. There are many reasons why Spain is an active market, including resource availability (plenty of sun), the availability and cost of land, trust in the regulatory environment and subsidy schemes, as well as low construction costs.
  • The 25th percentile (P25) pan-European Index price was €38/MWh for solar and €31/MWh for wind. This quarter’s report sets a baseline: In future reports LevelTen will track the percentage that the Indices change over time. There was significant variation of the wind and solar indices among countries, which can be attributed to factors like regulatory conditions, commercial operation date (COD) ranges, and regional differences in resource availability and development costs.
  • Wind PPAs had a wider range of offer prices than solar. Looking at the range between the P10 (lowest percentile) and P90 (highest percentile) offer prices, wind PPAs had nearly double the spread at €40,33/MWh versus €21,90/MWh for solar.
  • According to a survey of developers included in the report, a significant  majority – 67% – felt that the European Commission’s “Next Generation EU” fund would have no impact on corporate PPA activity.

Download the full European report:

LevelTen North American PPA Price Index Key Takeaways

  • Quarter-over-quarter, across markets, an evenly weighted index of P25 wind and solar prices increased $0.70 per megawatt hour (MWh), or 2.6%.
  • Year-over-year, the P25 solar index increased 3.1%, while wind increased 13.5%, reflecting significant increases in CAISO and PJM.
  • Changes in Q2 2020 were variable across regions and technology. For example, for wind,  PJM showed large increases, while other regions like SPP and MISO decreased. For solar, the increase in CAISO and SPP outweighed the decrease in MISO. 
  • FERC’s Minimum Offer Price Rule in PJM has appeared to have minimal effect on prices; solar PPA prices have remained steady in Q1 and Q2 of 2020. According to a survey of renewable energy developers included in the report, 30% of developers with projects in PJM said they were offering PPA prices, but the final terms were conditioned on more regulatory certainty. According to Wood Mackenzie: “FERC’s December MOPR has caused a great deal of uncertainty in the PJM market, and the July decision to uphold the MOPR is likely to keep uncertainty as the status quo. Despite this, Wood Mackenzie believes the MOPR will not have massive negative impacts on renewables and expects PJM utility PV annual capacity additions of 1.0 GWdc or more 2023 onward. This pace of capacity additions is driven by favorable solar economics and increasingly aggressive climate goals, especially in Virginia, which just set a target of 100% carbon-free electricity by 2050 that was followed by Dominion’s GW-scale RFP.”
  • According to the survey, COVID-19 impacted renewable energy developers in many ways, with “project development,” “construction,” “equipment procurement” and “energy marketing” being impacted the most.

Download the full North American Report: