L R AS Published on Sunday 29 January 2023 - n° 432 - Categories:purchase/sale contracts
Average PPA prices in Q4 2022 increased by only 4% and 3% respectively
The US and Europe saw a 4% and 3% increase in average solar power purchase agreement (PPA) prices in Q4 2022 according to Edison Energy.
In the US, stabilising policy changes have slowed the rise in prices, while European policies have provided less insurance against inflation and energy market volatility.
In the USEdison Energy notes that the 4% increase in Q4 is remarkable when compared to the 17% increase in Q3 and the total 48% increase over the full year 2022. Median PPA prices are currently $2/MWh higher than in the previous quarter. This is partly the result of rising interest rates and supply chain issues, as constraints worsened in the fourth quarter, leading to a decline in the price of electricity.This is the result of higher interest rates and supply chain issues, as constraints worsened in the fourth quarter, leading to lower availability, higher prices for PV equipment, and therefore higher PPA prices.
On the other hand, these upward factors were offset by the stabilising influence of the Inflation Reduction Act (IRA) and lower raw material costs: since Q4 2021, copper, aluminium and North American steel prices have all fallen, by 15%, 10% and 64% respectively. The stabilising effect of the IRA, which provides security for PPA holders and investors, has also increased confidence in the PPA market, slowing the rate of price increases.
In EuropeEdison reports that the EU revenue cap of €180/MW for renewable energy generation has undermined confidence in the European PPA market. The exact effect of the cap on PPA holders, which is to be applied retroactively from spring this year, is unclear.
The war in Ukraine has led to volatile energy prices in Europe, which has increased demand for PPAs and therefore prices.
https://www.pv-tech.org/solar-ppa-price-rises-slow-for-us-and-europe-though-forecast-is-mixed/
PV Tech of 26 January 2023
