FRANKFURT (Reuters) – European power purchase agreements (PPA) for green electricity decreased in price by 12.4% in the third quarter compared with the same time in 2023, price tracking platform LevelTen said on Thursday.

It cited factors including a decline in inflation and in market volatility following the COVID-19 pandemic and 2022 energy crisis.

“With current market conditions relatively stable, buyers may be wise to enter the market soon to secure the deals they need,” it said in its quarterly report.

“The variety of offtake (buying) opportunities available to potential PPA buyers has perhaps never been greater,” it said further.

PPAs are long-term agreements between corporate power users and solar and wind project developers. They are guarantees of supply for providers faced with meeting a European Union (EU) regulatory requirement for at least 42.5% of electricity to come from renewable sources by 2030.

For the developers, PPAs guarantee an income stream, making it easier to arrange financing.

The impact of the cheaper deals for ordinary household consumers is unclear, although policymakers say increased green power will ultimately cut costs.

LevelTen said the period had been marked by a big gap between regions, with an expansion of projects in central and eastern Europe, as well as an upsurge in solar projects in Ireland.

Supply chain issues and inflation have hampered the wind sector, and Belgium, France, Greece, Ireland, Italy and Portugal did not contribute prices in Q3 for the LevelTen index.

The 25% most competitive PPA prices for new-built capacity in July through September across 22 European countries in a market-averaged index dropped to 76.17 euros ($82.97) a megawatt hour (MWh) from 86.94 euros a year earlier.

They were down 1.3% from 77.21 euros in second quarter 2024.

In the blended index for wind and solar, solar showed a 1.3% quarter-on-quarter rise, which LevelTen attributed to higher Hungarian and Italian and newly added Irish prices.

It said lower interest rates should make financing easier for renewable projects, and that development appetite had also been enhanced by signs of positive political will in Britain, and German government wind capacity auctions.

Its quoted PPA term lengths are typically for 11 years. Prices are settled against hourly day-ahead wholesale market prices.[EL/DE]

($1 = 0.9180 euros)

(Reporting by Vera Eckert, editing by Barbara Lewis)