Insight
What will price cannibalisation mean for Europe’s renewable energy assets?
*Please note that this report only includes an Excel data file if this is indicated in "What's included" below
Report summary
As global renewable energy capex grows to almost US$200 billion a year, price cannibalisation is increasingly in the spotlight. Although impacting power price formation in Europe, when it comes to the development of price signals, renewables are price takers and not price setters. Since most existing wind and solar assets do not provide flexible generation, their realised prices are lower than average wholesale power prices in a market - this influence expands as the prenetration of renewables rises. Regulators are moving away from 20 to 30-year contracts for renewables – meaning investors must pay more attention to three things: gas price downside; terminal asset value; and opportunities to reverse negative captured price deltas.
Table of contents
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Executive summary
- German power market analysis: a case in point
- How price cannibalisation influences commercial and economic considerations
- A new playbook is needed
Tables and charts
This report includes the following images and tables:
- Peak demand and average hourly generation of wind and solar
- Hourly load and generation (average day by month)
- Merit curve (2020)
- The development of power capacity and supply mix
- Capture prices by technology (2020, 25, 30, 35)
- Realised price delta analysis
- Hourly realised prices by technology
- Fuel and power prices (2020, 25, 30, 35)
- IRR for different technologies
What's included
This report contains:
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