Solar PPA Prices Rise in Q4
Q4 2025 saw P25 solar PPA prices on LevelTen's Market-Averaged Continental Index rise by 3.2% after a 4% increase in Q3. Year over year, solar PPA prices in North America have risen by nearly 9%.
Not all North American markets saw prices rise, however, with a few posting modest quarterly declines. It is possible that some developers may now have greater clarity around the pricing impacts of tariffs and other costs, as well as more certainty around the One Big Beautiful Bill Act's (OBBBA) tax credit cuts. This improved clarity can help dial in pricing and remove risk premiums that had accounted for former uncertainties, which in some cases can allow for price reductions.
Amid significant development challenges, buyers and sellers are working to establish pricing equilibrium. In markets where contract values are more challenging to buyers, sellers may need to compromise and find pricing levels that are more transactable.
Wind Prices Post Quarterly Decline
P25 wind prices on LevelTen's Market-Averaged Continental Index decreased by 1% during Q4 following a 5% rise in Q3. North American wind PPA prices have gone up almost 9% year over year.
Given that wind development in the US is navigating uniquely high levels of regulatory volatility, price reductions may seem unintuitive. However, a number of factors may be at play, including market-specific pricing dynamics similar to those for solar. ISOs hosting a greater number of PPA offers with negative Projected Settlement Values (PSVs) are reaching the limits of buyers' downside tolerance, and developers may be adjusting pricing to acknowledge these realities.
Inversely, markets with consistently strong expectations for contract economics, like ERCOT, continue to see PPA price increases. P25 wind PPA prices in ERCOT have risen by more than 19% year over year. As Texas hosts an ongoing boom of data center and energy development, high demand will likely continue placing a premium on available wind capacity there.
Post-OBBBA Reality Emerges
The second half of 2025 was a season of intense development work as US firms ruthlessly reprioritized their project pipelines for a new, post-OBBBA reality. In November, LevelTen surveyed developers with project pipelines totaling more than 230 GW to assess the success of their safe-harboring efforts. The results were encouraging: of projects expected to achieve operation before 2029, more than three-quarters were expected to retain access to tax credits.
However, immense regulatory headwinds have persisted. Uncertainties related to the ongoing Section 232 tariffs investigation are adding development costs, and harsh new federal-level permitting procedures have stalled substantial amounts of development across the country. What's more, the US developer community is still awaiting guidance on pending Foreign Entity of Concern (FEOC) rules, which are expected to add compliance costs and, potentially, more hurdles for tax credit qualification.
Buyers Navigating Uncertain Market
Tech-sector buyers in particular are signing deals rapidly, as data center players eye the potential for battery storage to provide firm power and accredited capacity that can help their facilities get online faster (read more in full version).
At the same time, many corporate buyers are anxiously awaiting revised Greenhouse Gas Protocol (GHGP) Scope 2 standards, which are expected to be finalized in 2027 and phased in beginning in 2028. The current draft, open to public comment until January 31, could create more stringent inventory accounting standards for renewable procurement, including physical deliverability and hourly matching. These proposed updates have created divisiveness within the industry; some believe that enhanced standards are needed to accelerate the energy transition, while others worry they could increase administrative costs and ultimately deter corporate procurement.
The current uncertainty has caused some buyers — especially those primarily focused on Scope 2 abatement goals — to adjust or even delay their procurement strategies. Companies are also advocating for inclusion of a legacy clause that protects existing contracts.
The GHGP is currently used by 97% of companies that track and disclose their emissions, and is expected to remain the standard into the future. As such, LevelTen encourages all industry players to weigh in on the proposal.
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