Sweden, Spain have Europe’s lowest prices for corporate PPAs

Bloomberg New Energy Finance (BNEF) has released the results of Europe’s first-of-its-kind survey conducted to understand the region’s corporate power purchase agreements (PPAs) segment.

Sweden has the cheapest onshore wind energy prices for corporates at €30.50/MWh ($33.49/MWh) whilst Spain has the cheapest for solar PV at €35.50/MWh ($38.99/MWh).

Helen Dewhurst, the author of the report, said: “The very wide range of results was particularly interesting, with the gap between the cheapest PPA you might sign in Sweden and the most expensive PPAs in the UK being over €30 per MWh ($32.95/MWh).”

According to the study, in addition to technology, changes in PPA contract terms can have a significant impact on price.

Annual baseload contracts for round-the-clock power are between 1.5 and €3.5 per MWh more expensive on average than standard pay-as-produced deals that directly track renewable output.

Term length is another key determinant of corporate PPA pricing. In Europe, a €1.5-2.5/MWh premium is typically charged for 15-20 year terms, compared with more standard 10-15 year terms. This is a key distinction between Europe and the US – the world’s largest corporate PPA market (with 40.4GW activity, compared to 9.8GW in Europe) – where longer deal terms attract a discount.

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Kyle Harrison, a BNEF analyst specialising in corporate sustainability, commented: “Nearly half of the world’s RE100 companies are based in Europe – we know the demand for clean energy is there. But for PPA activity to scale up to U.S. levels, more light needs to be shone on regional nuances around contract pricing, structure and term length.”

BNEF’s inaugural 1H 2020 European Corporate PPA Price Survey aggregated data from 25 players within nine markets.