We were happy to join E-World, Europe’s biggest energy trade show, in Essen, Germany on 23-25 May. Since last year’s conference, the landscape of the energy sector has continued to change. The second half of last year was marked by roaring energy prices that started to cool off after some months. In addition, there were regulatory changes with state interventions and pan-European initiatives (i.e., the new market design proposal of the European Commission) that have spurred a lot of discussion. In this ever-evolving landscape, the need to accelerate down the path of decarbonisation and sustainability remains critical.
3Degrees was well represented with 12 colleagues from various business units, including our consulting and trading teams. We all had the chance to connect with current and prospective clients, enjoy talks with market players, gather market intel, and get intrigued by new ideas.
PPA Markets at the Epicenter
The PPA market was heavily impacted by the recent energy crisis. In most countries, volatility was the main characteristic with developers and buyers being faced with numerous unknowns. From all our discussions we gathered some very interesting observations:
- PPA availability has increased, prices have stabilised, and PPA interest remains strong.
- Permitting and interconnection continue to cause delays and pose risks to new project development.
- Accounting issues related to International Financial Reporting Standards (IFRS) are leading corporate buyers to consider physical PPAs over virtual ones.
- Interest is picking up for countries in Southern and Eastern Europe.
While demand and availability are high, closing deals is still not always a smooth process. On one hand, project developers face moving parts in their permitting and financing. On the other hand, corporate buyers need to have a good understanding of the energy and PPA market landscape to ensure fast decision-making. Experienced advisors with technical knowledge and expertise can help both corporate buyers navigate through the challenges and find solutions to close a deal and achieve their climate targets.
The Landscape for Guarantees of Origin (GOs)
Market participants for the European GO market are quite confident due to a number of factors:
- Demand for GOs continues to increase.
- Long-term GO offtake from new wind and solar projects is seen as an alternative to PPAs, but lack additionality.
- High GO prices do not seem to scare buyers away, but rather underline the need for better market insights and increased transparency.
New Ideas Gaining Attention
Innovation was also very well represented at E-World:
- Many companies were showcasing their offerings in hydrogen, a technology that remains in the spotlight with many unknowns to answer for while scaling up.
- When it comes to biogas/biomethane, there are a variety of voluntary and compliance standards gaining further attention, which is expected to solidify in the coming years.
- Some corporate buyers are moving into biomethane procurement via Gas Purchase Agreements (GPAs) and other structures, as they see limited alternatives to natural gas in order to meet their Net Zero targets.
Looking Toward the Future
E-World offers a unique opportunity to meet and connect with key market players, catch up on recent developments, listen and understand the challenges everyone is facing in the market, and, most importantly, identify paths to common solutions. 3Degrees remains committed to its mission to help take urgent action on climate change worldwide.