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Renewables price index jumps nearly 10% in Q1

Illustration of a wind turbine blowing money

Illustration: Eniola Odetunde/Axios

Data from LevelTen Energy’s latest "PPA Price Index Report" show a 9.7% spike in price last quarter versus Q4 2021.

Why it matters: The increase marks the first quarter-to-quarter rise in both wind and solar prices across major independent system operators (ISOs).

  • The report tracking power purchase agreements (PPAs) for wind and solar energy shows how (deep breath) supply chain disruptions, inflation, the war in Ukraine, existing solar tariffs, potential new solar tariffs, breakneck demand for renewables, interconnection queues, and surging shipping costs are driving up prices for electricity.

The big picture: On the one hand, the report reflects unprecedented challenges facing project developers, LevelTen vice president Robert Collier tells Axios.

  • "There’s a real supply-demand imbalance we’re seeing, where there is a ton of demand entering the market while there’s been this supply bottleneck," he says.
  • This comes amid piping-hot demand for new solar projects, as development platforms and deep-pocketed investors scour the market for projects to acquire.

Details: The prices cited in the report — tied to utility-scale PPAs — are most immediately affecting large energy buyers with renewable energy targets, from commercial and industrial (C&I) customers, to utilities, hospitals and mid-size energy companies.

  • "A lot of these big C&I companies have made really lofty, ambitious renewable goals, and it's not that easy to fill them," Anthony Sibilia, who leads the acquisition team at solar development platform Primergy, tells Axios.

Yes, but: "With gas prices at $6-7, maybe we start seeing utilities being able to start paying more, because that's what they're comping against," Sibilia says.

  • Plus, mandates to go green can alone provide ample justification, so long as utilities ostensibly show they've done their due diligence.
Data: LevelTen Energy; Chart: Axios Visuals
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