LevelTen Energy Report: US Wind PPAs See 3.3 Percent Increase, Solar Prices Hold Steady

Largely stable solar prices and a slight increase in wind PPA prices in the US during Q4 2024 were observed, according to LevelTen Energy’s Q4 2024 North American PPA Price Index report.

The report highlights significant trends and factors driving the changes in energy prices across different renewable sectors. As per the report, in Q4 2024, solar PPA prices on LevelTen’s Market-Averaged Continental Index increased by a modest 0.3 percent compared to the previous quarter. This uptick was tempered by a notable 14.5 percent drop in solar prices in Alberta, Canada. Excluding Alberta from the Q4 Market-Averaged Continental Solar Index, the data reveals a more substantial 3.3 percent quarterly rise in solar PPA prices across the United States.

The rise in solar prices within the US may be linked to ongoing uncertainties around tariffs, tax credits, and the expansion of transmission infrastructure. These factors, combined with fluctuating policy risks, have led PPA counterparties to incorporate flexible contractual terms that account for potential shifts in policy over the next few years. Despite these challenges, the solar market remains resilient, with most US Independent System Operators (ISOs) reporting upward price trends in Q4.

Wind power PPA prices saw a 3.3 percent increase in Q4 2024 after remaining flat in Q3. Year-over-year, wind PPA prices have risen by 13 percent. One contributing factor to the rise in wind prices could be the regulatory uncertainty surrounding wind development, especially offshore wind, as some political figures, including former President Donald Trump, have called for ending offshore wind projects. Although the future of wind development remains uncertain, such regulatory tensions may have led to higher PPA prices.

Wind power’s distinct ability to provide clean energy during nighttime hours continues to drive demand, particularly from tech companies and data centre providers who require consistent and reliable power. As the energy needs of AI and other technologies expand rapidly, large tech companies are increasingly seeking wind energy to meet their growing demands.

The report also highlights concerns over policy changes, particularly around tariffs and the future of the Inflation Reduction Act’s (IRA) tax credits following the November 2024 elections. Despite these concerns, the clean energy sector remains bullish on its long-term prospects, with clean energy investments having benefitted districts across the political spectrum, particularly in Republican areas. As such, a full repeal of the IRA seems unlikely, though modifications to tax credits are expected.

The PPA market has learnt to adapt to such uncertainties, often including contract terms that account for potential tariffs or tax credit changes. The ongoing efforts to reform permitting processes, which could speed up project development, also provide optimism for the future.

Despite regulatory uncertainties, the clean energy market continues to thrive, with companies moving forward with the development and procurement of clean energy. PPA buyers are increasingly adopting contract terms that allow for price adjustments or delays based on specific criteria, providing some level of protection against future policy shifts.

The demand for clean electricity remains robust, fuelled by electrification and growing power needs for data centres. Industry experts encourage buyers with clear visibility into their PPA agreements to proceed swiftly before further complexities emerge. As demand from large corporate buyers and data centres grows, the market is likely to shift in favour of buyers with the ability to procure large-scale deals quickly and efficiently. Smaller buyers with solid options are advised to secure these deals promptly.

Corporate buyers are also expanding their sustainability strategies by integrating additional tools such as tax credit transactions, which support broader procurement initiatives. LevelTen Energy’s Tax Credit Marketplace provides access to a wide pool of tax credits from some of the nation’s largest renewable energy developers, helping corporate buyers maximise their sustainability efforts.

As the clean energy landscape evolves, market players are adjusting to regulatory shifts and increasing competition. The PPA market is likely to continue favouring large, sophisticated buyers who can act quickly and secure long-term, large-scale deals. With mounting demand and regulatory uncertainty, companies are adapting to ensure they remain competitive in the ever-changing renewable energy market.