Prices of wind and solar power are trending down in U.S. markets, according to LevelTen Energy’s Q1 2019 PPA Pricing Index.
LevelTen Energy Inc., a commodity trading advisor based in Seattle, Washington, publishes the quarterly PPA Pricing Index. The power purchase agreement (PPA) offer averages prices submitted through the LevelTen Marketplace for wind and solar projects in five U.S. independent system operator (ISO) regions, which include California Independent Service Operator (CAISO), Electric Reliability Council of Texas (ERCOT), Midcontinent Independent System Operator (MISO), PJM Interconnection (PJM) and Southwest Power Pool (SPP).
The report found that overall, an evenly weighted index of P25 wind and solar prices decreased 39 cents MWh, or 2.3 percent quarter-over-quarter. Solar prices decreased in all markets except for MISO, and the largest decreases were in the CAISO, PJM and ERCOT markets with SPP only showing moderate decreases.
Prices of wind power also decreased but not as much as solar. ERCOT and SPP had lower prices, but CAISO, MISO and PJM had slight increases.
In addition to examining the prices, the Q1 report also included a survey of renewable energy project developers to find out which market factors impacted prices the most. The report also explored whether or not changes to federal tax credits would affect future renewable energy project development.
The LevenTen Energy report identified these six factors that have influenced pricing during 2019 Q1:
- Changes in engineering, procurement and construction costs
- Increased competition among developers
- Emerging PPA structures and deal terms
- Increased demand from corporations
- Increased demand from utilities
- Tax credit expiration/reductions
The report also included results of a survey of 40 project developers. Increasing competition from other projects was identified as the largest single market force behind the decreasing price trend for renewables.
The survey also asked whether the phase down of federal tax credits will decrease the number of projects. Fifty-five percent of respondents said that the expiring federal tax credits would not affect the number of projects. These results provide hope that other market forces, such as lower costs and rising demand, will temper the effects of the tax credit changes on renewable energy development, according to the LevelTen report.