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Impacts of Changes in the European Energy Market: E-World Takeaways

It was great to be back at E-World in Essen, Germany at the end of last month. It’s the biggest energy fair in Europe, and it was our first time back in over two years, as the organizers haven’t hosted the event since the pandemic began in early 2020. We’ve all felt a little lost without it and gathering over pints in the exhibit hall had the wonderful feel of a reunion with old and new friends.

Despite the enjoyment of being together again, there was a lot to discuss after two years of significant changes to the energy market—most notably, the impact of the war in Ukraine, which  has caused disorder in the European energy market. As a result of that, the EU introduced, REPowerEU, a plan to aggressively decarbonize while simultaneously reducing dependence on Russian fossil fuels. 

The 3Degrees team showed up in force to gain insight on this and more with members of numerous business units, including trading and origination, energy and climate consulting, and business development, among others . Each faction took away unique insights from the event and collaborated on these key highlights. 

Challenges in PPA Markets

Developers and buyers alike are facing a difficult market for renewable energy projects. There are funding, permitting, and interconnection issues—which are especially prevalent in Italy and Poland. There are plenty of projects set to come online in 2024, but buyers are looking for projects now, which means any project with an earlier start date is quickly being claimed. 

We can also expect to see more projects come into play in Spain, Italy, and the Nordic countries, as there is a lot of increased demand for projects in that region.

In order to get power purchase agreements (PPAs) completed in this market, corporate buyers may have to make some adjustments by following these guidelines to receive offers from developers:

  • Be prepared for speed in decision making and flexibility on the terms of your deal
  • Have high quality credit or credit support
  • Work with a consulting team that is well-versed in the current energy market and can help to educate and advise you throughout negotiations

Strong Outlook for Guarantees of Origin

Even through the turmoil in the current energy market, Guarantees of Origin (GOs) continue to see increased demand. This demand comes in the form of corporates that are interested in traditional PPAs or long term GO offtakes and utility companies that are switching to 100% green electricity. Each of these options involve a high volume of GOs.

In order to cover this increased demand, market participants are turning into net GO buyers. 

Closing Thoughts on E-World

Overall, it was great to hear insights on the current market, meet with old and new industry partners, and catch up with colleagues from all over the world. We continue to have great faith in the European energy market, despite its current challenges, and will be there to help aid in its accelerated clean energy transition.

3Degrees continues to be seen as a trusted partner in the international energy market, so if you’re interested in working with us, please get in touch.

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