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Clean energy PPA prices rose 6% in Q2 signaling ‘a new normal’

Clean energy PPA prices rose 6% in Q2 signaling ‘a new normal’

Investing in the U.S. market is no longer a safe bet for global solar developers due to the Auxin Solar tariff petition, according to the CEO of Lightsource bp Americas. (Courtesy: Lightsource bp)

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Trade disputes, supply chain constraints, and increasing shipping costs sent prices for clean energy power purchase agreements higher by 6% last quarter, according to market analysis by LevelTen Energy.

LevelTen’s P25 National Index for Q2 2022 showed that solar prices increased 3% to $36.33 per MWh, while wind jumped 13% to $33.91 per MWh.


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On top of persistent issues like interconnection and shipping delays, the Commerce Department’s investigation of the Auxin Solar tariff petition, along with record-high inflation, have “heightened uncertainty” for solar developers, Gia Clark, LevelTen’s senior director of developer services, said in the analysis.

While President Joe Biden issued a two-year pause on new tariffs on solar modules imported from Southeast Asia that are the subject of the Commerce investigation, around a third of developers surveyed by LevelTen last quarter said they need further certainty about the potential outcome of the investigation.

“Developers have been wrangling with skyrocketing project costs for two years now: from commodities and labor, to shipping costs and land leases,” Clark said. “Like so many things in our day-to-day lives, we may be getting accustomed to a new normal where everything — including the cost of PPAs — is going up.”

LevelTen National Index

LevelTen Energy P25 National Index

Solar prices in MISO jumped by 15.66%, or $6.20 per MWh, and now rest at $45.80. Year over year, MISO solar prices have gone up 29.6%. In PJM, solar prices rose by 6.8%, or $3.00 per MWh. Year over year, they’ve risen by 31.1%. And while solar prices only increased by 1.6% in SPP, they’ve increased 41.8% year over year.

Wind prices, meanwhile, increased in 3 out of 5 ISOs, according to LevelTen’s report.

Wind prices in SPP rose by 16.2%. Year over year, they have risen by 42%. ERCOT P25 wind prices increased by 9%, or $2.40 per MWh. Wind prices in MISO nudged up by 1.3%.

“Wind prices in SPP have surged in recent quarters,” said Rob Collier, LevelTen’s VP of Energy Marketplace. “Though the market has significant wind potential, a lack of transmission capacity hinders wind generator’s ability to get their generation to market, causing significant negative wholesale market pricing events and production curtailments that developers may be accounting for in their PPA prices.”

Collier noted that PPA prices are reflecting the impacts of inadequate transmission infrastructure and the phasing out of production tax credit incentives.

In April, LevelTen provided PPA market analysis that warned of “skyrocketing” development costs caused by a growing imbalance of supply and demand. PPA prices increased 9.7% during the first quarter of 2022 to nearly $40 per MWh.

‍Many developers rely on PPAs with corporations and other large-scale energy buyers to secure the financing required to construct solar and wind projects. Cost models used to price PPAs are becoming increasingly unwieldy as regulatory, interconnection, and supply chain challenges make it difficult to pin down costs and construction timelines, the firm said. 

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