Introduction

In the 4th quarter of 2022, leaders at the United Nations climate summit COP27 emphasized the urgency of emissions reductions, but buyers across North America and Europe who sought to make those reductions faced a challenging market. Across the continents, demand continued to outpace supply despite policy efforts to ease these constraints.

Corporate energy buyers can expect more stringent requirements around renewable energy procurement on the heels of newly released RE100 guidance. That, paired with recommendations coming out of COP27, will serve to reinforce accountability and transparency when it comes to addressing carbon and avoiding global greenwashing.

In Europe, median PPA prices continued to rise across most markets, as did those in the U.S., albeit at a slower pace than the previous quarter. Supply chain constraints continue to challenge the market, and rising interest rates are making the cost of financing renewable projects more expensive globally.

Governments are aiming to ease some of the market challenges. In Europe, the European Commission recently passed temporary regulations intended to streamline the permitting process for renewable energy projects. However, a proposal from the European Commission aimed at addressing high electricity prices is being adopted by different countries in different ways, causing some uncertainty and potential for PPA contracting to stall, particularly in Poland and Romania.

In the U.S., project developers are beginning to price PPAs more confidently as they digest new guidance on the long-term tax credit extensions in the Inflation Reduction Act (IRA), and a preliminary determination from the U.S. Department of Commerce on solar panel supply impacted by tariff circumvention.

Q4 saw a rise in U.S. National REC prices and have held steady, while the price of European GOs maintained their upward trend, driven by a significant imbalance of supply and demand.