Latest Quarterly Report: Wind PPA Prices Rise while Solar Dips

(Photo Credit: Zhang Fengsheng, Unsplash)

Wind power purchase agreement prices are rising and ones for solar are falling, according to LevelTen Energy’s Q1 2020 PPA Price Index. However, the new report emphasized that PPA prices aren’t the same as PPA values.

Seattle-based LevelTen aggregated data and analytics on almost every renewable energy project currently being developed in North America to produce the quarterly report. The index also surveyed renewable energy developers that have projects in the LevelTen Marketplace.

Highlights from the latest quarterly report include:

• An evenly-weighted index of wind and solar prices for P25, the most competitive 25th percentile offer price, increased $1.20 per megawatt hour quarter-over-quarter.
• The aggregate increase in prices was driven by an increase in prices for wind, with all major markets either flat or increasing quarter over quarter, following a similarly broad but less pronounced rise last quarter.
• Solar prices fell slightly by 0.5%.
• Year-over-year, P25 solar prices dropped 0.9% and P25 wind prices have risen 14.9%.
• Half of the developers surveyed said that, besides “competition,” “required internal rate of return” and “federal regulations” had the most significant effect on PPA offer prices in the first quarter.

Of the developers surveyed, 56% said that they anticipate covid-19 will affect PPA offer prices in Q2 2020, causing them to rise. LevelTen noted that even though prices could increase, values are holding.

“We believe it’s important that corporations maintain a long-term perspective on what drives project valuation,” the report said. “This means keeping their eyes focused on the intersection of demand growth and the cost of supply, and not on short-term disasters or their economic effects.”

Speaking with Environment + Energy Leader recently, LevelTen’s Jason Tundermann observed that demand for renewable energy from corporate buyers has remained strong despite reduced economic activity due to the pandemic.

Storage Projects on the Rise

More than 60% of developers surveyed for the index said that they are working on storage projects.

“In many of the largest renewables markets, storage on a standalone basis or paired with renewables has become par for the course, whether to capture value as merchant assets or to capitalize on aggressive state-led incentive programs,” said Rob Collier, vice president of developer relations at LevelTen Energy.

The report anticipates that, as the number of states mandating storage increases, so will the percentage of companies developing storage projects.