The average solar power purchase agreement (PPA) price in North America remained constant between the third and fourth quarters of 2024, holding steady at US$56.76/MWh.
This is the key conclusion to come from market analyst LevelTen Energy’s latest report into the North American PPA market.
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According to LevelTen’s “market-averaged index”, which reflects an average of equally weighted P25 prices from a number of North American independent system operators (ISOs), the average price of a solar PPA increased just 0.3% quarter-on-quarter. Over a longer term, from the fourth quarter of 2023 to the fourth quarter of 2024, the average price of a solar PPA increased by 7.7%.
Meanwhile, the average prices of wind and blended PPAs increased from the third quarter of 2024 to the fourth, reaching US$67.81/MWh and US$62.29/MWh, marking the 15th consecutive quarter that solar PPAs are, on average, cheaper than wind and blended PPAs.
This stability will be a welcome development for the US solar sector in particular, which has seen growing uncertainty following the re-election of Donald Trump, and his openly pro-fossil fuels agenda. In its report, LevelTen noted that more sophistication in the terms of PPA agreements could be a key tool in minimising uncertainty regarding tariffs and financial support for renewable power projects.
“Demand for clean electricity continues to skyrocket, driven by continued electrification and fast-growing data centre power needs,” wrote the report’s authors. “Buyers with line-of-sight to a signed PPA are encouraged to move forward expeditiously before any further complexities emerge.
“One option to deal with uncertainty around tariffs and tax credits is to include contract terms that allow PPA price adjustment or cash-on-delivery delays based on specific criteria, which can provide some degree of future-proofing.”
Regional variation
However, the analyst noted that the stagnant average solar PPA price was largely driven by a 14.4% decline in PPA prices in the Alberta Electric System Operator (AESO) grid, which covers the province’s power network. Removing this extreme example, the fourth quarter market-averaged index shows a “more substantial” 3.3% quarter-on-quarter increase in North American solar PPA prices, with four of the five ISOs profiled showing an increase in average prices, and PV Tech has asked LevelTen for more detail on such significant regional variation.
According to LevelTen’s figures, the average price of a solar PPA in the AESO market reached US$47.98/MWh, the second-lowest among ISOs profiled, above only ERCOT, with US$45.09/MWh.
The highest price reported among an ISO in the fourth quarter of 2024 was US$80/MWh in the PJM grid, which has reported the highest average prices among all qualifying ISOs since the beginning of 2022; while NYISO posted prices higher than US$80/MWh in the first quarter of 2023, there have not been enough deals signed within the grid in the quarters since to hit LevelTen’s “minimum threshold” of data volume for inclusion in quarterly reports.
The largest quarter-on-quarter and year-on-year percentage increases in PPA prices were seen in the CAISO market, which saw PPA prices increase by 8.2% between the third and fourth quarters of 2024, and by 24.7% between the fourth quarter of 2023 and the fourth quarter of 2024. In dollar terms, this translates to increases of US$4.63/MWh and US$12.23/MWh, respectively.
The relative stability of the US PPA market follows similarly stable periods in 2024, including the first and third quarters of the year.
Our coverage of the European renewable power PPA space can be read here.
