LevelTen has released its Q3 2019 PPA Pricing Index, which includes U.S. wind and solar power purchase agreement (PPA) price breakdowns during the quarter, as well as developers’ predictions for 2020 prices.
To determine how PPA offer prices have shifted from Q2 2019, LevelTen analyzed data on approximately 600 price offers from more than 360 renewable energy projects across the U.S. In Q3, PPA offer prices rose overall, quarter to quarter.
Wind prices increased $1.08/MWh, or 4.4%, during the quarter, the report says. Annually, they increased 11.2%. In Q3, the MISO market was the primary contributor, with a $4+ rise in prices, amounting to a 19% increase.
However, solar prices dropped $0.14/MWh, or 0.5%, in Q3, continuing solar’s long-term trend of decreasing prices, the report says. Annually, solar prices dropped 5.4%. In Q3, the MISO market saw the largest drop in solar prices, with a 3.7% decrease, following a 2.9% drop in Q2.
In addition, deal terms became shorter from Q2 to Q3 2019: Wind project contract lengths dropped from 13.5 to 13.0 years, and solar contract lengths decreased from 14.0 to 13.9 years.
LevelTen also conducted a survey of 33 utility-scale renewable energy developers with active projects in the LevelTen Marketplace. When asked if they expect PPA prices to increase or decrease in 2020, 41% predicted they will stay about the same. Meanwhile, 35% said they will decrease, and 21% said they will increase (compared to an even split at 27% last quarter). In addition, 3% said there is too much uncertainty to answer and that it will depend on the market.
When asked what will have the largest impact on their PPA offer prices in 2020, 24% said competition from other renewable energy projects, and 24% also said expiration or phase-down of federal tax credits. Coming in third place was federal/state policy at 9%.
“There’s early indicaton that developers may be concerned about increasing prices,” says Rob Collier, vice president of developer relatons at LevelTen Energy.
More on the report can be found here.