Today LevelTen Energy released its Q3 2020 PPA Price Index reports for North America and Europe, delivering the industry's most comprehensive analysis of actual PPA price offers in 16 renewable energy markets across the globe. Here are just a few highlights: Fill out the forms below to download the full reports.
PPA Prices Rising in North America
In North America, LevelTen's report reveals that PPA offer prices are on the rise for both wind and solar projects. After dropping continuously for six quarters, the 25th percentile (P25) index of solar offer prices has risen for the past two quarters, and at $29.30 per megawatt hour (MWh), it has surpassed its previous recorded high of $29.20/MWh back in Q3 2018. The P25 index of wind prices has been trending upward for the past two years, and jumped 9% this quarter to a new high of $30.60/MWh. Historically, the P25 index of wind offer prices has been lower than that of solar; the first time it rose above the solar index was Q1 2020. This quarter, it rose higher than solar once again.
"LevelTen continues to believe that we're seeing the impact of the step down in production tax credits in our Price Index. Wind developers got a bit of relief at the end of 2019 when Congress extended PTC eligibility to wind projects that started construction in 2020, and this spring when - as part of COVID relief - the IRS extended the placed-in deadlines from 4 to 5 years. Even so, the number of 100% and 80% PTC-eligible projects that are still available for PPA contracting is dwindling," said Rob Collier, Vice President of Developer Services, LevelTen Energy. "With lower PTC eligibility, developers must make up project revenues in their PPA prices. Despite these increases, we want to underscore that we still see wind, and renewables in general, as being the most competitive form of generation for the future."
Rising demand can also put upward pressure on prices, especially in areas where supply can't keep up. In this quarter's developer survey, LevelTen wanted to understand the most important factors impeding developers from building new projects where demand is high. "Grid connection delays" and "permitting challenges" were the top two factors selected by respondents. In areas where the demand outpaces supply, 73% of respondents said they anticipate that PPA prices will increase on average.
"Renewable energy buyers should be aware that it may be a buyer's market in many places now, but as more companies, utilities and governments commit to renewable energy, we're already starting to see the pendulum swing to a seller's market. As a result, though renewables will continue to be the most competitive form of generation, we expect PPA prices will rise. Those with 2030 goals (or sooner) may benefit from locking in contracts today," said Collier.
To download the full North American report, including PPA prices by ISO and hub, fill out the form below.