Europe’s Cheapest Corporate Solar and Wind PPAs in Spain, Sweden: BNEF

Spain and Sweden respectively have the cheapest average corporate PPA prices in Europe for wind and solar electricity, according to a new survey.

Spain and Sweden respectively have the cheapest average corporate PPA prices in Europe for wind and solar electricity, according to a new survey. The BloombergNEF’s (BNEF) 1H 2020 European Corporate PPA Price Survey has found that the lowest price levels for onshore wind corporate PPAs in Europe are available in Sweden at 30.50 EUR/MWh. And Solar PV shows its lowest price levels in Spain at 35.30 EUR/MWh but is generally more expensive across the region than wind. The report reveals big differences in renewable energy PPA prices across Europe.

Helen Dewhurst, an analyst at BloombergNEF and 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 PPA in the UK being over 30 euros per MWh.”

The survey looks at the minimum-maximum price range for the most common PPA scenario – a ‘base case’ – for both solar and wind across nine markets. It then shows how PPA prices change depending on three main adjustment factors: capacity, term length and contract structure.

In addition to technology, changes in PPA contract terms can have a significant impact on price. For example, the survey found that annual baseload contracts for round-the-clock power are between 1.5 and 3.5 euros per MWh more expensive on average than standard pay-as-produced deals that directly track renewable output. The extent to which volume has an impact on price generally increases in inverse proportion to project size.

Term length is another key determinant of corporate PPA pricing. In Europe, a 1.5-2.5 EUR/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 U.S. – the world’s largest corporate PPA market (with 40.4GW activity, compared to 9.8GW in Europe) – where longer deal terms attract a discount.

Kyle Harrison, a BNEF analyst specialising in corporate sustainability, said “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 US levels, more light needs to be shined on regional nuances around contract pricing, structure and term length.”