Looking ahead into 2020, 60% of wind developers feel power purchase agreement (PPA) prices will stay the same in 2020, according to LevelTen Energy’s Q4 2019 PPA Pricing Index. Solar developers are split at 40% each on whether or not prices will stay the same or decrease.
LevelTen Energy states that the survey responses indicating wind prices are more likely than solar prices to remain constant or increase reflect what the company has seen in its PPA pricing data. Quarter-over-quarter and year-over-year wind prices have flattened and even increased slightly while solar prices have decreased, the report notes.
Other highlights of the report include:
- Once again, most developers selected “competition from other developers” as the largest factor impacting PPA prices; this has remained consistent every quarter since LevelTen began the survey in Q1 2019. In Q4 2019, 44% of solar developers and 43% of wind developers surveyed chose competition as the number one factor. When LevelTen broke down the results by ISO, competition remained the number one factor in each region. “Quarter over quarter, we consistently see competition as a key driving force in PPA pricing. What is particularly noteworthy in Q4 2019 is the alignment of PPA price drivers across both solar and wind,” said Rob Collier, vice president of developer relations at LevelTen Energy.
- Increased engineering, procurement and construction (EPC) costs was the number two factor for both solar (18%) and wind (29%) developers in Q4. Cost was the number three factor in Q3 2019.
- In Q4, expiring tax credits, which held the number two spot in Q3 2019, had the least impact on solar prices (4%) but was the number three factor for wind prices (14%). “It’s interesting to observe the decrease in importance from Q3 to Q4 of tax credit expiration. Even though we recently saw Congress offer a modest extension to the wind Production Tax Credit, while the solar Investment Tax Credit remained unchanged, the PTC’s earlier step-down schedule than that of the ITC could be the cause of the difference in survey results between solar and wind. In other words, wind developers are more concerned about the step down that is already underway,” said Collier.