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Us Solar PPA Prices up 15% Year on Year in 2023

Close-up rooftop solar panel system with attic junction box

Prices for power purchase agreements (PPAs) rose in some US markets such as California and declined in others, including Texas, according to a new report from LevelTen Energy.

PPA pricing index

LevelTen Energy released its quarterly PPA pricing index for North America, releasing data for the full year ending in 2023. The company operates a PPA marketplace with over 900 project developers, energy advisors and resellers, and some of the world’s largest clean energy buyers.

The report noted that P25 prices for PPAs rose 3% in the fourth quarter and 15% for all of 2023. P25 pricing represents the 25th percentile of prices developers are offering in contracts, not the final transacted PPA prices.

LevelTen reported a mixed regional picture for the US solar market. P25 prices rose 15% in CAISO, California’s regional grid operator, while falling in other markets.

“The increases were likely driven by regulatory adjustments, prevailing market conditions and increasing buyer demand,” said Sam Mumford, an analyst at LevelTen Energy. “The CAISO increase in particular was likely caused by select developers pricing projects much higher than the previous quarter’s P25 price, potentially to account for expectations around cost of capital or future REC value.”

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