Italy continued to hold the top spot, with 31.7% of PPA offers in Europe. It’s solar sector has continued to grow through 2020, including the completion of the nation’s largest solar site to date. Image: European Energy.

COVID-19 has had a minimal impact on Power Purchase Agreement (PPA) offer prices, according to research from LevelTen Energy.

In the company’s Q4 PPA Price Index, it looks at how the most competitive (P25) PPA offers in North America and Europe have been affected by the pandemic in comparison with earlier in the year.

Solar prices in European PPA’s dropped slightly it found, falling a further 2.7% in Q4 in a continuation of a trend seen since Q2 2020. When combined with wind PPA’s – which alone saw a small dip of 1.7% in Q4 after growing earlier in the year – in the blended P25 Index, prices decreased by 2% from Q3.

In Europe the top market continued to be Italy, accounting for 31.7% of offers from developers, following by Spain, which driven by a booming solar industry took 26.7% of all offers.

PPA prices continued to rise through 2020 in America, but the COVID-19 pandemic is having a much larger impact on development timelines than on prices. Solar PPA offer prices began to rise in the US for the first time since 2018 LevelTen noted, although it was overtaken with wind price increases.

Year-on-year, wind and solar in the blended technology index saw offer prices for PPAs rise 17.7% in the US. This was driven by a number of factors, including COVID-19, grid connection delays and permitting challenges as Rob Collier, vice president of Developer Relations, LevelTen Energy explained.

Where there was a high demand for projects, these factors created a bottleneck, with supply constraints then putting upward pressure on prices.

“In addition, many of the most economically competitive projects have already contracted with offtakers, leaving higher-priced projects available in the market.”

However, project timelines were more greatly impacted than PPAs, with 59% of developers saying COVID delayed commercial operations dates, and 41% saying it delayed PPA negotiations and executions according to a survey by LevelTen.

“Some deals took a little longer than anticipated: procurement and finance teams were understandably focused on other priorities when shutdowns began, but as the world adjusted to a new normal, renewable energy transactions picked back up,” said Collier.

“We don’t expect the rising prices to soften demand in 2021, as boards of directors, investors, governments, employees and consumers will continue to push for sustainability commitments that will require all large energy consumers to turn toward renewables.”