North American solar PPA prices drop for the first time since 2020


Solar power purchase agreement (PPA) prices in North America have downed for the first time since Q1 2020 due to the rise in incorporating benefits of the Inflation Reduction Act (IRA) and a stabilized solar supply chain.

According to PPA services firm LevelTen Energy, the 25th percentile PPA prices in Q2 of 2023 saw a modest decline of 1% compared to Q1 2023, although the prices still increased by 25% year-on-year.

The service company said after nearly a year since the introduction of the IRA, developers were also more able to incorporate the benefits of the IRA into their business practices and strategies. Guidance from the US Internal Revenue Service and Treasury Department increased considerably, providing greater clarity on energy community bonuses, domestic content requirements, and tax credit transferability provisions.

LevelTen Energy noted that tax credit transferability, in particular, will considerably “broaden the playing field for tax investment in renewable energy projects, providing a substantial financial opportunity for corporations to leverage their federal tax burdens to support clean energy buildout”.

The US government implemented the related Act last year which greatly constrained PV imports, while the plan for added tariffs on solar imports from Southeast Asian producers  also affected supply. LevelTen Energy said these importation bottlenecks had eased in recent quarters, contributing to the grow of solar installations.

As a result, a total of 12 GW of PV modules were imported to the US in Q1 2023, but there were only 29 GW of modules imported during 2022.

Although PPA prices remained stable in Q2, the Electric Reliability Council of Texas (ERCOT) was an exception as prices rose by 14% quarter-on-quarter. LevelTen Energy said the increase could be partially because of the regulatory uncertainty brought by a series of proposals in Texas’ 88th legislative session, threatening to harm renewable development in some ways.

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