Each quarter, the LevelTen Energy PPA Price Index provides an in-depth look at average offer prices for wind and solar power purchase agreements (PPAs) submitted on the LevelTen Marketplace. Here are some takeaways from this quarter.
Price impacts
Annual change from Q3 2018 to Q3 2019: Solar prices have dropped 5.4 percent. From the previous quarter prices dropped $0.14 per MWh.
LevelTen asked developers what had the largest impact on their PPA offer prices in Q3, and whether they expect prices to increase, decrease, or stay about the same in 2020. Developers still view competition as having the largest impact on PPA pricing. Looking back at the start of the year, 30% of developers held this view. That number increased in Q2 to 52% and has dropped back down to 35% in Q3; indicating that other factors are weighing heavily as well.
The next four most frequently cited impacts on pricing were:
• Expiration of the ITC
• Increases EPC costs, capacity and volatility,
• Increased risk exposure from new contract terms
• Changes to capacity markets and expected capacity revenue
This quarter, 35% of survey respondents thought prices would increase, while 21% thought prices would decrease (compared to an even split at 27% last quarter).
Tax credit impact
Taking LevelTen’s Q1, Q2, and Q3 survey results in succession, it looks like the industry is beginning to show some concern over the tax credit phaseout.
“In our Q1 PPA Price Index, we asked developers if they expect the tax credit changes to decrease the number of projects in which they commence construction on in 2020, and 55% said “no,” while only 15% said “yes.” In Q3, 15% of respondents saw the expiration or phase down of federal tax credits as having the largest impact on their PPA prices, and 24% feel this will carry over into 2020.”
— Solar Builder magazine
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