For the first time since the second quarter of 2022, the average European solar power purchase agreement price fell below 70 euros ($76.15) per megawatt-hour, the second consecutive quarter this has happened.

The European wind industry has also experienced what LevelTen analysts call a "tough few years," with the average price of wind power purchase agreements signed in Europe falling 29 percent quarter-on-quarter. The firm noted that much of these price declines stem from broader political uncertainty in Europe, where a series of elections have roiled many markets and created uncertainty in many markets.

The firm wrote in its latest report: "The EU Parliament elections in June shifted the legislature to the right. This change, and the new alliances that could form as a result, could block the adoption of new EU climate proposals for years to come. However, important initiatives like the Green Deal are unlikely to be targeted."

This rightward shift in political power is also playing out on the European national stage, with the rise of right-wing politics threatening renewable energy policies in countries such as France.

Last week, France awarded only 180MW of new rooftop solar capacity in its latest tender, half the capacity of the previous tender and raising questions about the future of solar power in the country. Similarly, Ginevra Biadico, senior legal adviser at international law firm Dentons, told PV Tech Premium that Italy's ban on new agricultural photovoltaic (agriPV) projects is "illogical" and undermines new solar installations in southern Europe.

The average price of a power purchase agreement in North America rose

In North America, on the other hand, average PPAs continued to rise. In the first quarter of this year, such prices showed a trend of "steady growth", with the average price of solar power purchase agreements in the region reaching $53.68 / MWH.

Currently, such prices have remained in the $50-60 / MWH range for four consecutive quarters, suggesting that temporary political stability in the United States has also contributed to the continued stability of PPAs.

It is important to note that despite the collapse in European prices, renewable power purchase agreement prices are still higher than their peers. In North America and Europe, the average price of solar PPAs reached $53.68 / MWH and $68.35 / MWH, respectively, while the average price of wind PPAs reached $65.85 / MWH and $99.63 / MWH, respectively.

Despite market pressures in the U.S., such as growing uncertainty about whether many foreign manufacturers can comply with anti-dumping and countervailing duty (AD/CVD) regulations, investors and developers have adopted "innovative ways" to close deals and keep power purchase agreement prices relatively stable, the LevelTen report noted. These methods include linking aspects of the PPAs price to variable indicators, such as tariffs or interest rates, so that the value of the PPAs changes in response to changes in macroeconomic conditions.

"Recently, this trend has manifested itself in the increase in contract clauses designed to address a range of development risks, particularly through the use of pre-requisites (CPs) and indexation in power purchase agreements (PPAs)." LevelTen analysts explained. "CP s provides developers with a 'safe exit' in their contract in case an unlikely but unaffordable adverse event occurs during development."

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