LevelTen Energy, which operates a solar and wind energy power purchase agreement (PPA) platform, released its PPA Price Index Report for Q2, 2024. The company reports data based on P25 prices, or the 25th percentile of secured PPA contracts on its platform.
The report noted after a 1% decrease in P25 prices in Q1 2024, solar PPA prices have increased by 3% in Q2.
LevelTen said a variety of forces are putting upward pressures on North American solar PPA prices. Long interconnection queues, permitting difficulties, expansion of tariffs on Chinese PV components, and a relaunched AD/CVD investigation are all drivers in the price increases.
These events illustrate a trade law environment that is growing increasingly challenging for solar developers in the United States. The added costs for projects utilizing duty-subjected components are folded into PPA prices — which may have contributed to this quarter’s rising solar price trend.
“These events illustrate a trade law environment that is growing increasingly challenging for solar developers in the United States. The added costs for projects utilizing duty-subjected components are folded into PPA prices — which may have contributed to this quarter’s rising solar price trend,” said LevelTen.
LevelTen also noted a 7% increase in wind PPA prices in Q2 2024.
The PPA platform said that market participants continue to find innovative ways to mitigate risks and get deals done during this time of uncertainty. Recently this has been characterized by increased use of contractual elements that address development risks, specifically through the use of conditions precedent (CP) and indexation in PPA contracts.
“CPs provide developers with contractual ‘offramps’ should unlikely but untenably adverse events occur during the development journey,” said LevelTen. “And more counterparties are indexing subcomponents of PPA price to metrics like tariffs or interest rates, allowing the PPA price to flex up or down in light of future shifts in these important factors.”
LevelTen said these contractual elements can provide some future-proofing to help deals continue to get done.
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