LevelTen Energy, a power purchase agreement (PPA) marketplace operator, released its Q4 PPA Price Index report, noting that solar PPA prices increased by 3.3% in the United States in Q4.
“The increase in solar pricing in the United States may be related to uncertainties around tariffs, tax credits, and transmission build-out,” said the report.
Price data is aggregated and reported in percentile buckets. For example, “P25” refers to the most competitive 25th-percentile offer price.
Solar P25 PPA prices averaged $50 per MWh based on LevelTen’s continental index report. Wind P25 PPA prices similarly averaged $49.75 per MWh.
“A power purchase agreement is a long-term contract between energy buyers (offtakers) and energy suppliers. PPAs define the price that an energy supplier will receive for every megawatt-hour (MWh) of energy generated from a renewable energy asset. They also outline the amount of electricity to be supplied, the length of the agreement and details such as transmission issues and insurance,” said IBM.
LevelTen noted that the 2024 U.S. presidential election results have raised concerns about tariffs and the future of the Inflation Reduction Act’s tax credits for renewable projects. It said that while these risks have emerged, “clean energy simply remains good business for both sides of the political aisle.”
The report said that despite these market headwinds, there is optimism in the industry for permit reform, leading to an increased pace of project development.
“The PPA market has grown accustomed to accounting for tariffs, either directly in PPA prices or through tailored contractual terms. Time alone will reveal which policies ultimately come into effect, but the PPA market has proven time and again that it can successfully adapt to a variety of market conditions,” said LevelTen.
The marketplace operator said one option for addressing uncertainty around tariffs and tax credits is to include contract terms that allow PPA price adjustment or cost-of-delays based on specific criteria, which it said would provide some degree of future-proofing.
LevelTen said that demand for clean energy remains strong.
“Despite this regulatory uncertainty, the industry is moving forward building and buying clean energy as usual and is largely avoiding any preemptive reactions until material policy shifts emerge,” said the report.
This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: editors@pv-magazine.com.
By submitting this form you agree to pv magazine using your data for the purposes of publishing your comment.
Your personal data will only be disclosed or otherwise transmitted to third parties for the purposes of spam filtering or if this is necessary for technical maintenance of the website. Any other transfer to third parties will not take place unless this is justified on the basis of applicable data protection regulations or if pv magazine is legally obliged to do so.
You may revoke this consent at any time with effect for the future, in which case your personal data will be deleted immediately. Otherwise, your data will be deleted if pv magazine has processed your request or the purpose of data storage is fulfilled.
Further information on data privacy can be found in our Data Protection Policy.