European solar developers ditching auction tariffs for PPAs due to higher costs

Panellists discussed the challenges European solar developers are currently facing. Image: Solar Media.

European solar developers hit by rising module costs are scrapping tariffs secured in auctions and are instead looking to sign power purchase agreements (PPA), according to a speaker at today’s Large Scale Solar event.

Christopher Renna, commercial director at consultancy Natural Power, said that with developers affected by rising capex for projects under development, they are sometimes “able to find ways to walk away from their tariff, sign a PPA – we have seen people exploring this option and some actually looking very closely at taking it”.

This article requires Premium SubscriptionBasic (FREE) Subscription

Unlock unlimited access for 12 whole months of distinctive global analysis

Photovoltaics International is now included.

  • Regular insight and analysis of the industry’s biggest developments
  • In-depth interviews with the industry’s leading figures
  • Unlimited digital access to the PV Tech Power journal catalogue
  • Unlimited digital access to the Photovoltaics International journal catalogue
  • Access to more than 1,000 technical papers
  • Discounts on Solar Media’s portfolio of events, in-person and virtual

Or continue reading this article for free

Other developers are taking a “very risky proposition” of delaying module purchases to see if prices will go down in the coming months, Renna said at the event, hosted by PV Tech publisher Solar Media in Lisbon. He added: “So there are people who have some projects that have very tight margins. We see this across the industry, across markets in Europe. So people have to get creative to fit within those constraints.”

One company impacted by such cost increases is Akuo Energy, a developer and independent power producer that was awarded 370MW of capacity in Portugal’s solar auction in 2019, which featured record-low bids.

“We are suffering,” said João Maria de Macedo Santos, head of region, Portugal, at Akuo Energy. Nonetheless, the company is progressing with projects it secured in the auction, with one expected to break ground shortly.

To cope with the short-term volatility, “it’s key to have very long-term financing partners”, with Akuo having collaborated with insurance companies and pension funds, João Maria de Macedo Santos said.

Echoing comments made during the event yesterday, he said developers need to work on highlighting the benefits of solar to the public. “We see in Portugal, public opinion needs to be changed from a threat to an opportunity. It’s a lot of work for promoters, also the public sector to explain, educate people, share the value of these projects locally.”

The panel discussion turned to supply chain issues, with Mark Augustenborg Ødum, co-founder and chief investment officer of Better Energy, revealing that the Danish independent power producer has long-term plans in place with its suppliers, including container traffic from China, to mitigate such challenges.

However, with parts of China entering new COVID-related lockdowns and European solar players having significant external dependency for products, Augustenborg Ødum called for a ramp-up of polysilicon production in Europe.

“The elephant in the room is polysilicon production. We need a huge polysilicon production facility in Europe,” he said, adding subsidies should be provided in the European Union.  

26 November 2024
Málaga, Spain
Understanding PV module supply to the European market in 2025. PV ModuleTech Europe 2024 is a two-day conference that tackles these challenges directly, with an agenda that addresses all aspects of module supplier selection; product availability, technology offerings, traceability of supply-chain, factory auditing, module testing and reliability, and company bankability.
11 March 2025
Frankfurt, Germany
The conference will gather the key stakeholders from PV manufacturing, equipment/materials, policy-making and strategy, capital equipment investment and all interested downstream channels and third-party entities. The goal is simple: to map out PV manufacturing out to 2030 and beyond.

Read Next

May 23, 2024
The global power price agreement (PPA) market has become a buyer’s market, according to speakers at the Renewable Energy Revenues Summit.
May 22, 2024
Fluctuations in the price of power should not dissuade investment in renewable power projects, according to speakers at this morning's event.
May 21, 2024
The ISO has granted DMEGC Solar its ISO 14067 certification, to hold it to high standards of carbon footprint reporting.
May 21, 2024
The World Bank and Masdar have announced a US$159 million financing package to support a 250MW solar-plus-storage project in Uzbekistan.
May 17, 2024
The US Department of Commerce (DOC) has initiated investigations into solar cell imports from Southeast Asia under the antidumping and countervailing duty (AD/CVD) tariffs.
May 15, 2024
Ahead of Renewable Energy Revenues 2024, we spoke to John Mushriqui, founder and CEO at InRange, who will speak at this year’s event.

Subscribe to Newsletter

Upcoming Events

Upcoming Webinars
May 29, 2024
11am (EDT) / 5pm (CEST)
Solar Media Events
June 4, 2024
London, UK
Upcoming Webinars
June 11, 2024
3:00 PM (BST) / 4:00 PM (CEST)
Solar Media Events
July 2, 2024
Athens, Greece