State-subsidized clean energy auctions have played a key role in driving down renewable energy costs and increasing wind and solar capacity across Europe over the past few decades. But if recent years have proven anything, it’s that European corporations have a strong desire to buy green electricity — with private-sector procurements driving dozens of gigawatts of capacity additions, and with the PPA market poised to expand much further.
As EU politicians debate Europe’s electricity market reforms, recommendations from some member states, like Spain, have advocated for governments to largely supplant the role of private entities in the PPA market to leverage the price certainty PPAs bring. But is there evidence supporting the idea that the expanded use of fixed-price government contracts is the best way to keep Europe’s wholesale electricity prices at sustainable levels?
Data on how government auctions and PPAs stack up with regards to their respective abilities to cost-effectively drive renewable additions has been sorely lacking —until now. Kristian Lande, Senior Director of European Energy Analytics at LevelTen Energy, has examined several European nations to see how their varying degrees of reliance on government CfDs for renewable projects correlates with wholesale electricity prices, and with each country’s progress towards a decarbonized grid.
This robust analysis shows a clear negative correlation between low PPA volumes and high retail electricity rates, and conversely, that countries that have fostered healthy PPA markets are increasingly benefiting from lower retail electricity prices. As EU politicians work to address the continent’s energy crisis, these findings make abundantly clear the important role the PPA market has to play in protecting Europe’s ratepayers.
This analysis is now free to download by filling out the form below. For a deeper dive into the impacts of government auctions and PPAs across several European countries, as well as the latest European PPA pricing data and market intelligence, download our Q4 2022 European PPA Price Index report today.
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