![LevelTen Energy says solar PPA prices being offered by developers in North America are impacted by a rise in prices. For this technology, the prices rose $50/MWh for the 1st time. (Photo Credit: LevelTen Energy)](http://media.assettype.com/taiyangnews%2Fimport%2Fwp-content%2Fuploads%2F2023%2F10%2FLevelTen-Energy-North-America.png?w=480&auto=format%2Ccompress&fit=max)
The power purchase agreement (PPA) prices for large-scale solar power plants in North America crossed $50/MWh for the 1st time in Q3/2023, according to LevelTen Energy as price rise across the board impacts developers.
Solar PPA prices rose 4% QoQ and 21% YoY with the rise reported from financing to interconnection, and from labor to supplies.
Based on the prices offered by developers for PPA contracts, online renewable energy marketplace LevelTen Energy says solar PPA prices in Q3/2023 reached $51.23/MWh. This increase, explained analysts, over the previous quarter was mainly due to rising prices in PJM and SPP and high-priced ISO-NE solar offers in LevelTen's Index.
"While Q3's price increases were more mild than in some previous quarters, the aggregate impact of years of price rises are making it more challenging for many corporate buyers to secure CFO approval," explained Senior Director of Strategic Accounts at LevelTen, Gia Clark.
As buyers are expected to take more commercial and financial risk, some of them end up halting late-stage procurements. Providing relief to the buyers is difficult with developers themselves facing a prolonged high interest rate environment. As Clark points out, energy players of all sizes are facing the heat.
The Inflation Reduction Act (IRA) offers help with bonus tax credits that has the potential to drive down prices, but LevelTen says developers await more clarity to leverage these credits with confidence.
"Prior to renewable energy projects being constructed and connected to the grid, for most markets they go through a series of interconnection studies. These studies determine if new transmission or upgrades are needed before a project can be connected to the grid, and the costs associated with these changes," reads the report. "But because of the high volume of projects between each study, there are massive swings in interconnection costs, and it is hard to have certainty on pricing before these studies are completed."
While developers face industry headwinds and higher cost of capital and interest rates, PPA prices are not likely to go down substantially anytime soon. The buyer demand for PPAs is expected to remain elevated since corporations 'know the cost of not decarbonizing will, in the long run, cost far more than procuring now.'
LevelTen Energy's Q3 2023 PPA Price Index North America can be purchased from its website.