LevelTen Energy’s Q1 North American PPA Price Index Report, which is now available for subscribers, showed a stabilization of solar prices and a decrease for wind power purchase agreements (PPAs) in Q1 of 2025.
Solar Prices Largely Flat in Q1
LevelTen’s Q1 2025 PPA Price Index revealed only a modest increase in Market-Averaged Continental solar PPA prices, with a quarter-over-quarter rise of less than 1%. This marks the second consecutive quarter of stable solar PPA prices in the North American market; an encouraging sign that the PV sector is finding itself on firmer footing following a long period of pandemic-era supply chain woes and an array of policy headwinds. While the sweeping tariffs recently implemented by the Trump Administration raise concerns, the US solar sector is well-attuned to the minutiae of developing and contracting around tariffs, which were also levied widely by the former Biden Administration. As electricity demand grows in the US, the solar industry is ready to provide clean energy volumes to corporate buyers and utilities looking to meet their pressing goals.
Q1 Sees Wind Prices Dropping
In Q1, P25 wind PPA prices on LevelTen Energy’s Market-Averaged Continental Index declined by 5% compared to the prior quarter. This downward trend was driven largely by wind PPA price declines in MISO and SPP.
Amid an environment of potent policy uncertainty, it may seem counterintuitive to see wind prices dropping while demand remains high. But the wind sector has also re-established equilibrium after several years of inflation, rising interest rates, and supply chain challenges. With the impacts of recent and potential future policy events not yet entirely clear, the current moment may offer a window for wind buyers to act on strong offers. Demand for wind volumes remains high, with the technology’s higher capacity factors and attractive production profiles particularly compelling for tech players seeking to power growing data center needs.
Federal Policy Uncertainty Immense
There has been no shortage of attention on the Trump Administration’s sweeping tariffs, which have been applied to a wide range of US trading partners in recent months. But Q1’s data set shows that if these measures are to place upward pressure on PPA prices, this has yet to occur. Q2’s PPA Price Index may better reflect the impacts of these executive actions, but for now, the US PPA market is exhibiting resilience and stability.
The fate of the IRA (Inflation Reduction Act) and its expansive suite of clean energy tax credits has yet to be determined. Concern is most certainly warranted here, yet there is optimism that a wholesale repeal of the bill is unlikely. This is largely due to the fact that the vast majority (80%, by some estimates) of the billions of dollars in investments catalyzed by the IRA have flowed into Republican-leaning districts. In March, 21 House Republicans doubled down on their opposition to gutting the IRA, providing hope that Republicans’ slim House majority will prove insufficient if and when the IRA is targeted.
Despite Uncertainty, Deals Are Moving Forward
The North American PPA market continues to remain resilient and robust. Clean energy buyers and sellers are forging ahead with PPAs, bringing creativity and collaboration to the negotiation table, with Q1 RFP volume on the LevelTen Energy Platform reaching 13 million megawatt-hours. The complexities brought by the pandemic era provided a period in which new contractual terms emerged that protect counterparties and allow for flexibility, and the sector continues to incorporate nuanced, risk-mitigating provisions.
Such terms include price adjusters to address tariff concerns, change-of-law clauses, and more recently, a growth in the inclusion of Trade Event provisions meant to address executive actions and other hard-to-predict events within Force Majeure clauses. Contracting remains a nuanced endeavor, but PPA counterparties continue to innovate and be flexible with one another to find transactional success. That said, the future is unknown, and buyers are encouraged to be mindful and accommodating of what developers need to secure financing.
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