PPA prices continue to fall. Now is an ideal time to sign, platform says

The price of electricity sold through long-term direct power purchase agreements (PPAs) fell by approximately 12% year on year in the third quarter of this year. Platform LevelTen announced this in its regular report. According to the platform, given current market conditions, now may be the right time to enter into a PPA.

Relatively favourable conditions in wholesale markets and among renewable energy developers were reflected in the third quarter in the average price at which electricity is sold through PPAs. These are currently relatively popular both among renewable energy developers and commercial companies seeking to cover their consumption with electricity from renewable sources.

PPA prices generally fell by 12.4% compared with the same period last year. The decline continues to be driven by falling inflation and steadily decreasing volatility following the COVID-19 pandemic and the 2022 energy crisis. Compared with the previous quarter, the decrease was more modest, at 1.3%. Nevertheless, this shows that the price decline is relatively gradual.

Electricity prices from new projects in 22 European countries thus stood at 76.17 EUR/MWh between July and September, representing the already mentioned decline of more than 12% from 86.94 EUR/MWh a year earlier.

While prices for electricity generated by wind farms have been falling for four consecutive quarters, prices for electricity generated by solar plants rose slightly after three months. This was primarily due to price increases in Italy and Hungary.

However, the question remains whether the downward trend will continue. As LevelTen suggests, now may be the ideal time to enter into a long-term direct power purchase agreement. “The diversity of offtake options available to prospective PPA buyers has perhaps never been greater,” the platform added.

Long-term direct power purchase agreements are becoming increasingly important in the European Union as the preferred instrument for securing electricity supplies from renewable energy sources, especially for large businesses and industrial consumers. A PPA offers the possibility of securing a stable price for its duration, including for more than 10 years ahead. This may be crucial for some consumers, particularly during periods of price volatility in energy markets.

In the Czech Republic, the PPA market is only gradually developing. Publicly available information exists on two corporate PPAs in the Czech Republic. The first is a PPA concluded between Ambient Energy (as producer/supplier) and ŠKO-ENERGO (the offtaker). The second is a contract through which Jarošovský Brewery secured its electricity supply.

This year, a PPA was also concluded for electricity supplies from the VIFOR project in Romania, which is to be built in Romania. The offtakers are companies from the T-Mobile Group.

“We focus on environmental impact, which is why we concentrate on companies with high energy consumption. They have the greatest interest in corporate PPAs, which cover a wide range of industries, including manufacturing companies, telecommunications operators and breweries,” Milan Kamaryt, manager responsible for PPAs at Rezolv Energy, told the Ekonom daily.