Modest Solar & Wind PPA Price Increase In North America

Renewable energy transaction platform LevelTen Energy’s latest report on corporate wind and solar power purchase agreements (PPA) in North America shows prices having gone up modestly in Q2/2024.  

For solar energy, the PPA prices went up by more than 3% in the reporting quarter, after a modest drop in Q1 this year. Compared to $51.93/MWh in the previous quarter, the price went up to $53.68/MWh (see RE PPA Prices Stabilized In North America During Q1/2024).  

Analysts blame development challenges including long interconnection queues and permitting difficulties as placing upward pressure on solar PPA prices across North American markets.   

Difficulties compound with the uncertainties created by the expansion of tariffs on Chinese PV components, and investigation into antidumping and circumvention tariff investigation (see US ITC To Continue AD/CVD Investigations Into Solar Imports).  

In its report, LevelTen calls these situations to have created an ‘ever-evolving environment’ to which the solar developers will need to adapt continually. Recently, an ACORE and CEA report warned that module prices will increase significantly if the AD/CVD tariffs are imposed (see Potential AD/CVD Tariffs To Hurt US Solar Sector).  

Even for wind energy, the P25 PPA prices went up 7% sequentially to $65.85/MWh, making it the 3rd consecutive quarter of increasing prices.  

Additionally, the increased PPA prices for both wind and solar reflect the increase in insurance premiums for clean energy projects thanks to adverse weather events increasing in intensity and frequency.  

To deal with this, analysts believe the market is finding innovative ways to mitigate risks to go ahead with contracts, including contractual elements that address development risks, and indexing subcomponents of PPA price to metrics like tariffs or interest rates.   

The good news is that major buyers are continuing with large procurements as the demand for electricity and clean energy increases.  

A free preview of LevelTen Energy’s Q2 North American PPA Price Index Report is available on its website.