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Solar prices stabilized, wind prices rose in Q1 2024: report

Solar prices stabilized, wind prices rose in Q1 2024: report
(Photo by Karsten Würth on Unsplash)

Following two consecutive quarters of price increases, in Q1 2024 solar power purchase agreement (PPA) prices dropped by 1%; and North American P25 wind PPA prices increased by 2%, and have risen by 20% YoY, according to a new report from LevelTen Energy.

The report, North America Q1 2024 PPA Price Index, follows LevelTen Energy’s previous report this year, showing North American P25 PPA offer prices rose by 4% in Q4 of 2023. P25 solar PPA prices nationally rose 3% over Q3 and P25 wind prices increased 5%, per the report.

“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, energy modeling analyst at LevelTen Energy.

“We don’t expect this window of opportunity to last indefinitely,” Mumford said. “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. 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. Heightened government scrutiny on the solar supply chain could increase costs for developers — with the potential for PPA pricing impacts,” he said.

For the second consecutive quarter, P25 solar prices decreased in Texas (ERCOT) this quarter by 1.6%. California (CAISO)’s P25 solar PPA price also declined, sustaining a 12.7% drop this quarter.

“The price drop in CAISO was largely driven by a high volume of competitively-priced projects under 50 MW that entered the LevelTen Energy Marketplace in Q1,” said Mumford. “In contrast, in Alberta (AESO) we saw an increase in offer liquidity, most likely due to the recent lifting of the moratorium on any renewable energy development greater than 1 MW in the province. However, significant regulatory uncertainty remains, which could explain the 7.2% increase in P25 solar prices. We saw more offers in AESO this quarter, and at a higher price than the offers in Q4,” he said.

Across North America, wind P25 prices rose 2.4%. Although wind prices have benefitted from some of the same tailwinds as solar prices, the availability and pricing of turbines remain a challenge for developers.

Meanwhile, P25 wind prices in PJM increased 17.7%.

“This increase is likely due to growing project development costs more broadly, including those related to land, interconnection, supply chain, and construction,” Mumford said. “We saw several projects in PJM increase their prices significantly in Q1 compared to Q4. Interconnection burdens might lessen as the year progresses, but it’s unlikely we’ll see reduced costs in the other areas,” he said.

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