While PPA prices are trending upward, LevelTen doesn't expect demand to soften. According to a survey by the firm, only 12% of solar developers are responding to supply chain pressures by delaying projects.
The price of solar and wind power purchase agreements in North America increased 4.3% in the second quarter of 2021, and is up 14.4% year-over-year, according to an analysis by LevelTen Energy.
Demand for renewable energy by public and corporate groups, coupled with global supply chain constraints, are likely causing the pricing pressure, analysts wrote.
“Much like we’re seeing supply constraints in other areas of the economy, the most desirable wind and solar projects are going fast," said Rob Collier, vice president of developer services at LevelTen Energy. "The key takeaway for organizations with fast-approaching emissions reductions targets is to act now to capture high-value PPAs."
Solar prices increased quarter-over-quarter and year-over-year in Q2 2021 for the first time since Wood Mackenzie began modeling solar market prices in 2014.
Important trend to watch. My explanation:
1) wind/solar PPAs are growing in popularity
2) global supply chains are still messed up
3) might be that some of the easiest places to build have already been snagged, so less desirable locations/resource are now being exploited https://t.co/c1prKUnGXQ
Trade issues, meanwhile, threaten President Biden's goal of generating 45% of electricity from solar energy by 2050. The U.S. government's enforcement of the Withhold Release Order (WRO) on metallurgical-grade silicon (MGS) from companies with facilities in China's Xinjiang region, as well as the possible extension of the Section 201 tariffs on imported solar modules, have added to the uncertainty. Additional tariffs could come, too, from the Antidumping and Countervailing Duties (AD/CVD) case involving companies from Malaysia, Thailand, and Vietnam.
While PPA prices are trending upward, LevelTen doesn't expect demand to soften. According to a survey by the firm, only 12% of solar developers are responding to supply chain pressures by delaying projects.
“ERCOT solar prices have increased by nearly 10% since Q2 2020, driven by steady quarterly increases in pricing at ERCOT’s North, South, and Houston settlement hubs,” Collier said. “Still, ERCOT continues to be the most competitive solar market in the U.S., as abundant land, a unique market structure, and high insolation provide a favorable environment for solar development."
Subscribe to Renewable Energy World’s free, weekly newsletter for more stories like this
