Diesel prices stabilized in the second quarter, except for ERCOT
SEATTLE , July 18, 2023 /PRNewswire-PRWeb/ -- North America's P25* Solar Power Purchase Price (PPA) has stabilized in Q2 2023, according to a new report from LevelTen Energy, the world's largest operator of the PPA market. . In the second quarter, national solar P25 PPA prices were down 1% from the first quarter and up 25% year on year. The LevelTen P25 wind index is up 13% QoQ and 30% YtD.
Diesel prices fall 1% after more than three years
“While the 1% change is small, this is the first time since the first quarter of 2020 that we are seeing a decline in the average price in the solar PPA market on the continent,” said Gia Clark , senior director of strategic accounts at LevelTen Energy. . “This is an encouraging sign that conditions are stabilizing,” he said.
“In recent years, solar energy developers have overcome challenges such as inflation, supply chain complexity, rising interest rates and regulatory uncertainty. Although we have not solved all these problems, we have made progress. Now, “almost a year. With the passage of the Inflation Reduction Act, developers are also better able to incorporate the benefits of the law into their business practices and strategies. With these positive moves, we are starting to see some relief in price increases,” Clarke said.
Increasing mobility in the solar supply chain will also support the Solar PPA price trend in the second quarter of the solar supply chain. Wood Mackenzie and SEIA reported that 12 gigawatts (GW) of PV modules crossed the U.S. border in the first quarter of 2023 alone, compared with 29 GW imported through 2022, thanks to a 6.1 GW increase in solar capacity.
Wind prices up 13% due to poor supply
“PPA wind power prices are on the rise in North America ,” Clarke said. In the second quarter, P25 wind energy prices rose by 13% compared to the first quarter and by 30% year on year. Wind energy developers face the challenge of bringing new projects to market while demand is stable, leading to higher prices.
“Wind projects typically have higher power and less flexibility in site conditions than solar projects, making it difficult to control the land. Permits take longer due to the more complex environmental review process. We also listen to developers. longer than ever before, and when they return, the interconnection fees will be much higher than historical rates,” explained Clark.
According to the Berkeley Lab, the typical time from needing a connection to commercial operation has increased from less than two years for projects built between 2000 and 2007 to almost four years for projects built between 2018 and 2022. “Connectivity is a major factor influencing project timelines. . The longer it takes to build a project, the more expensive it will cost, which encourages developers to charge a higher price for their PPAs,” explains Clark.
“Due to licensing and connectivity issues, fewer wind projects have entered the market compared to solar projects. However, there have been some changes in the market that may bring more offerings; Firstly, the availability of offshore fields due to the recent offshore licensing reform. , and the second is the possibility of developing joint solar projects, when a small number of turbines are built on a solar site.”
“Although there is no opportunity in the market, the demand for wind remains stable,” he said. “Regular shoppers want to use wind to diversify their portfolio, and those with compatible watch targets rely on wind to generate clean electricity when solar cannot.”
In the first half of this year, LevelTen Energy tracked 11.9 gigawatts of clean energy capacity contracted under North American PPAs, which will surpass the 22.5 gigawatts signed in 2022 by 2023.
“A wave of demand for clean energy is expected on the horizon, not only from businesses, but also from utilities and retail electricity providers,” Clark said. Electric vehicle market share continues to grow in both personal and fleet use, artificial intelligence is placing new demands on data centers, and clean hydrogen producers will demand carbon-free electricity every hour. It is becoming increasingly difficult to find clean energy projects that are approved for interconnection. Corporations must act now to secure PPAs that will help them meet their emission reduction targets before competition gets fiercer.”
APP prices vary by ISO depending on regional regulations.
The LevelTen report covers the period April to June 2023 and shows PPA prices and trends in North American Independent System Operator (ISO) markets, including AESO, CAISO, ERCOT, MISO, PJM, and SPP. Reported data is generated based on PPA prices uploaded by renewable energy developers to the LevelTen energy market.
- The price of solar PPA P25 has remained almost unchanged in all markets except ERCOT. “Reassuringly, the decline in prices for APP compared to the dramatic increase in recent years. However, it is unlikely that the price trend will decrease. Instead, an uptrend with occasional downtrends is likely,” says Clarke. “Builders are getting better every day how additional IRA tax credits can impact future project financing, which we hope will have a positive impact on pricing for buyers,” Clarke said.
- Amid ERCOT legislative uncertainty, solar PPA prices rose 14%, contrary to the national trend. “Historically, ERCOT has had some of the lowest solar PPA prices in the country,” Clarke said. “Regulatory threats in the 88th session of the Texas Legislature have created an environment of deep uncertainty for real estate developers, driving up prices. While the worst proposals failed, this session showed that renewable energy opponents have a lot of influence in Texas .”
- Development issues have resulted in reduced wind availability in PJM. “LevelTen did not receive enough data on wind projects this quarter to report PJM prices. This is the first time that the LevelTen PPA price index market did not appear in our wind energy index five years ago,” Clarke said.
“Wind development in PJM has been challenging for a number of reasons, including local opposition, obstacle resolution in states such as Ohio and Illinois , and long PJM trunk lines. We have heard that these issues have prompted several developers to go down the path of PJM changes. ... and solar energy is a transition to development, resulting in less availability of wind projects.”
- MISO wind power prices rose 24% due to connection delays. "This increase is likely due to persistent connectivity issues at MISO," Clarke said. A Berkeley Lab study found that MISO interconnect costs have risen significantly over time, and the average interconnect fee has increased as the number of interconnect requests has increased.
Price stabilization creates opportunities for buyers
“After price stabilization led to higher prices this quarter, now is the right time to buy,” says Clarke. “It's still a competitive environment, so buyers will be more successful if they act quickly. LevelTen is committed to developing innovative ways to generate clean energy faster.”
In May, LevelTen launched PPA Auctions, allowing willing buyers to quickly close PPAs with mature projects through a streamlined auction process. By entering into PPAs with projects that have completed their key development milestones, electricity buyers can reduce the risk of project delays and ongoing price fluctuations.
Download free summary or full report
Learn more by visiting http://www.leveltenenergy.com/ppa to download a free summary or purchase the full report. The LevelTen report helps renewable energy developers, buyers and financiers navigate the PPA market with real PPA quote data and experts. LevelTen also offers custom market reports and shopping optimization reports. Contact datasolutions@leveltenenergy.com for more information.
* The LevelTen P25 Price Index is the 25th percentile PPA price. All PPA price data in LevelTen reports is based on the price offered by the developer for the PPA contract, not the price of the PPA transaction.
About LevelTen Energy
LevelTen Energy provides the markets, software, automated analytics and expertise needed to accelerate clean energy operations. The LevelTen platform is the world's largest online hub for renewable energy buyers, sellers, consultants, asset owners and financiers. The platform includes the LevelTen electricity marketplace, which provides access to thousands of prices for electricity purchase agreements in 28 countries in North America and Europe . It also includes the LevelTen Asset Marketplace, which brings together over 850 renewable energy developers and project owners and provides them with the online tools and experience they need to buy, sell and finance assets in North America and Europe . Together, LevelTen and partners share #OneGoal to accelerate the energy transition. Visit LevelTenEnergy.com for more information.
media contact
Walker Sands LevelTen Energy, LevelTen Energy, (206) 669-8131, levelten@walkersands.com
SOURCE LEVEL Ten Energies
