Dive Brief:
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The average cost of U.S. wind and solar power purchase agreements is up 4% since the July passage of the One Big Beautiful Bill Act, according to data from the LevelTen Energy PPA marketplace.
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Buyers of renewable energy are looking to speed up their procurement timelines, with 68% of procurement teams saying they feel they need to “act immediately” to lock in energy supply, according to a LevelTen survey released on Wednesday. Buying clean energy remains a top priority for 95% of teams surveyed.
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With almost a third of developers saying they plan to suspend or cancel projects as a result of the reconciliation bill, prices will probably continue to rise after the tax credits expire, according to Rob Collier, who oversees the energy marketplace at LevelTen.
Dive Insight:
Offers on LevelTen's marketplace have already increased by $2/MWh to $8/MWh since the bill’s passage in July, with the lowest offers rising faster than the median. Developers whose projects are on track to begin construction before the end of the year have seen offers rise by nearly $20/MWh, according to LevelTen.
The average PPA contract price rose just 1% between the end of the first and second quarter, tying the recent escalation to the reconciliation bill, according to LevelTen. Buyers sense they need to act quickly to lock in electrical supplies before prices rise, Collier said.
“There really is a cliff and a ticking clock here,” he said. “There will be a cohort of projects that qualify for existing tax credits ... Once that cohort is gone, the tax credits aren’t coming back. There are no other projects.”
Buyers were already struggling to find projects with development timelines that matched their clean energy procurement goals, triggering what has been a long-term trend of rising PPA prices. The tax credit cliff, Collier said, has only narrowed that window.
And prices are unlikely to fall for projects that won’t qualify for tax credits in the future, he said.
The number of energy projects on the market appears set to shrink — 29% of developers surveyed by LevelTen said they plan to suspend or cancel projects as a result of the reconciliation bill. Those projects that remain will have to charge buyers more to cover development costs in the absence of federal tax credits, Collier said.
LevelTen Energy estimates that solar PPA prices will need to increase by $8/MWh to $17.50/MWh to remain economic without the tax credits.
