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A report released by LevelTen Energy reveals that the price of electricity generated from renewable sources in North America has increased by almost 30% over the past year, due to fast-rising development costs and overwhelming demand.
LevelTen Energy operates the largest global power purchase agreement (PPA) marketplace and is also a major provider of renewable energy transaction infrastructure.
“North American renewable energy developers are struggling to build solar and wind projects fast enough to keep up with demand because of the extremely difficult development landscape this quarter,” reported the authors.
“This is leading to a shortage of power purchase agreements for corporations and other large energy buyers, which are critical to bringing new clean energy projects online and meeting corporate and federal net zero targets.”
This has resulted in a 9.7% quarterly increase in the prices of power purchase agreements to almost $40 per MWh, along with a 28.5% annual increase.
“Every aspect of project development has risks to evaluate and balance,” Gia Clark, senior director of Developer Services at LevelTen Energy, said in the news release on the report.
“These days, these risks feel particularly high-stakes. Developers must factor these complexities and uncertainties into PPA offers to safeguard their project success, as well as their business’ long-term financial security. As long as these myriad headwinds persist, we can expect elevated PPA prices across North America.”
At a recent industry event, wind power developers expressed that they have even had to result to shrinking their businesses, amid an increasingly unfavorable business atmosphere.
“The state of the supply chain is ultimately unhealthy right now,” said the chief executive of onshore wind at GE, Sheri Hickok.
“It is unhealthy because we have an inflationary market that is beyond what anybody anticipated even last year. Steel is going up three times. It is really ridiculous to think how we can sustain a supply chain in a growing industry with these kinds of pressures,” she added.
As governments around the world and many private industries alike continue to highlight ambitious emissions reductions target in the pursuit of net zero, dependence on renewable energy infrastructure is only expected to increase.
