Renewable PPA Prices In North America Stabilise in Q1, Drop In Europe

The drop in solar project costs seems to have finally caught up with solar PPA prices, with the average price of a solar PPA in the Electric Reliability Council of Texas (ERCOT) market falling by 1.6%, the second consecutive quarter in which such prices fell, and the price of solar PPAs signed in the California Independent System Operator (CAISO) market falling by 12.7%. As the most influential market by size in LevelTen’s ambit, the decline in US prices was enough to set off any rise in other markets, notably Canada where rates rose by over 7%.

Meanwhile in Europe, the firm says PPA prices actually dropped 5% across Europe in the first quarter of 2024. Solar P25* PPA prices dropped 5.9% and wind prices dropped 4.3% as the PPA market continued to respond to subdued wholesale electricity prices across Europe — with lower costs in the solar supply chain and a stabilising regulatory landscape contributing as well.

“A lower natural gas price from the mild winter and abundant solar panels, combined with hopes of lower interest rates, allowed some developers to offer slightly lower prices this quarter,” said Sam Mumford, analyst, energy modelling, at LevelTen Energy. “We don’t expect this window of opportunity to last indefinitely.”

“Demand is increasing rapidly from AI and the electrification of everything, and more corporations are entering the PPA buyer pool as 2030 sustainability deadlines approach,” added Mumford, indicating that lower prices may not last. “Trade restrictions could impact pricing soon as President Biden’s two-year tariff moratorium on PV components shipped from certain Southeast Asian countries ends in June.”