Addressing Permitting Challenges: Europe’s Strategy to Accelerate Renewable Energy Development
“Energy is the power that drives every human being. It is not lost by exertion, but maintained by it.” – Germaine Gree
As the urgency for renewable energy deployment escalates in light of the ongoing energy crisis, Europe faces certain challenges impeding faster growth of utility-scale wind and solar photovoltaic (PV). Specifically, complex permitting processes, limited participation in competitive auctions, and long development timelines have stymied the pace of utility-scale renewable energy development for the years 2023 and 2024. While forecasts have been revised upwards, the increase is marginal due to these hurdles.
Permitting Challenges and Limited Participation
A multitude of issues confront developers including rising equipment costs, inflation, and supply chain constraints. These challenges have led to hesitancy in participating in competitive auctions, partly due to relatively low ceiling or reference prices and fixed contract prices that aren’t indexed to inflation.
European countries and the European Commission are working at a rapid pace to streamline permitting processes to foster a conducive environment for renewable energy development. However, the impact on deployment for 2023-2024 is expected to be limited.
Policy Changes to Address Pricing Issues
To address these hurdles, some governments have taken steps to modify auction designs to better reflect the changing pricing environment. For instance, Germany raised its auction ceiling prices and Portugal has adjusted contract prices for inflation. Consequently, the forecast for utility-scale solar PV has been revised upwards for these markets.
Emerging Trends: Corporate PPA Market Growth and Project Delays
In Spain, growth in the corporate Power Purchase Agreement (PPA) market is resulting in revised utility-scale deployment for the country. However, the upside potential for other markets remains uncertain.
The upward revision for onshore wind capacity results from delayed projects finally coming online, after supply chain constraints and cumbersome permitting procedures lengthened project lead times.
In summary, although the urgent need for renewable energy deployment is evident, Europe faces significant challenges in achieving a rapid pace of utility-scale renewable energy development. Policymakers are addressing these issues head-on, modifying auction designs and streamlining permitting processes to stimulate growth. As delayed projects begin to materialize and the corporate PPA market expands, the prospects for renewable energy development in Europe continue to look promising.