In the second quarter, North American renewable energy buyers saw P25 solar and wind power purchase agreement prices rise another 5.3% to $41.92 per MWh, according to a new report from LevelTen Energy.
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While wind prices increased a modest 2.5%, solar prices increased by more than 8%. Compared to last year, prices are now nearly 30% higher.
No single issue looms greater in solar developers’ minds than the U.S. Commerce Department’s investigation into anti-dumping and countervailing duties (AD/CVD), which could lead to tariffs of up to 250% on solar components imported from four Southeast Asian countries, the source of 80% of U.S. supply.
Amid industry uproar over this investigation and its wide-reaching impact, in June President Biden issued an executive order to place a two-year moratorium on solar tariffs, generating mixed reactions.
In LevelTen’s survey of 45 renewable energy developers, nearly one third of respondents (29%) said the decision will allow them to market and price new or more PPA offers for projects slated to become operational in 2023 and 2024.
However, 40% said that it’s too soon to say how the moratorium will impact their business, and 31% said they still need assurance that the tariffs will not be retroactively applied after the two-year moratorium has passed.
LevelTen’s Q2 report, covering April to June 2022, shows PPA prices and trends in six U.S. Independent System Operator (ISO) markets, including CAISO, ERCOT, MISO, NYISO, PJM, and SPP, and one Canadian ISO, AESO.
The report is based on actual PPA price offers uploaded onto the LevelTen Energy Marketplace from wind and solar project developers over the last quarter.
P25 solar prices rose across all ISOs during Q2 for the second consecutive quarter. “It’s not surprising to see solar prices jump more than 8% last quarter,†said Clark. “Developers aren’t raising prices to boost profits. They are just trying to cover the added cost and uncertainty that headwinds like interconnection delays and the AD/CVD investigation create.â€
Inflation is driving up costs along renewable energy value and supply chains. LevelTen’s survey of 11 advisors (representing large energy buyers) and 51 energy sellers showed that approximately 50% said that “indexing PPA prices to commodities prices or other capital expenditures†is important to getting PPAs signed.
Southwest Power Pool (SPP) P25 wind prices increased more than 16%. “Wind prices in SPP have surged in recent quarters,†said Rob Collier, VP of Energy Marketplace at LevelTen Energy.
“Though the market has significant wind potential, a lack of transmission capacity hinders wind generators’ ability to get their generation to market, causing significant negative wholesale market pricing events and production curtailments that developers may be accounting for in their PPA prices.†■