Inflation moderation and reduced market volatility, compared to 2022 and 2023, have driven down the prices for renewable electricity in power purchase agreements (PPAs) across Europe.
In the third quarter of 2024, PPAs for renewable energy saw a 12.4% price decrease compared to the same period in 2023, as reported by price-tracking platform LevelTen and cited by Reuters.
Many corporate buyers and power users are turning to PPAs with renewable energy developers to secure long-term access to green energy.
“With the market conditions being relatively stable, now might be a good time for buyers to lock in the deals they need,” analysts at LevelTen suggested in their Q3 2024 report.
Additionally, the range of available PPA offers is vast. According to LevelTen, the variety of options “has perhaps never been greater.”
The rise in renewable energy has been significant. Between 2019 and 2023, solar and wind power replaced one-fifth of the European Union’s fossil fuel electricity generation, according to a report from energy think tank Ember.
Capacity installations surged by 65% during this time. Wind power capacity grew by 31%, reaching 219 gigawatts (GW), while solar capacity more than doubled to 257 GW, according to Ember’s data.
Wind power’s growth has been so strong that, in 2022, it overtook natural gas to become the EU’s second-largest electricity source, Ember noted.
This year, Europe has even seen negative electricity prices due to the surge in renewable power production.
Wholesale electricity markets in Europe recorded the most hours of zero or negative prices on record, driven by abundant renewable energy generation and a mismatch between supply and demand for solar power. This trend is slowing investment in additional capacity and highlighting the need for greater investment in energy storage. With better storage, power producers could avoid curtailing output or paying to offload excess electricity, according to a Reuters analysis.
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