星期三, 8月 4, 2021
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Supply chain issues are driving solar prices higher and delaying some projects, LevelTen says

Around 12% of developers who were surveyed said they were delaying projects, and the firm’s price index ticked up 4.3% during the second quarter.

Source:pv magazine

The surge in demand for renewable energy from public and private entities, combined with rising development costs, and structural barriers to entry for new projects put upward pressure on power purchase agreement (PPA) prices during the second quarter, according to LevelTen Energy, a provider of renewable energy transaction infrastructure.

The firm’s PPA Price Index rose 4.3% from between the first and second quarters, and 14.4% year-over-year.

The firm said that solar PPA prices have risen steadily since the beginning of 2020. Prices eased a bit in the most recent quarter, as solar PPA prices rose 0.3% quarter over quarter. Between Q4 2020 and Q1 2021, solar PPA prices rose 2.6%.

The firm’s index for solar prices rose 0.3%, to $31.45 per MWh during the second quarter. Year-over-year, the index rose 9.8%, or $2.80 per MWh.

The firm said that a “more substantial increase” could be seen in the third quarter as developers reassess their price offers. LevelTen said that a majority of solar developers surveyed —on the order of 73%— reported that they were increasing PPA prices to meet the rising cost of polysilicon and solar modules.
Despite PPA price increases, the pace of project development will likely continue, the firm said. Around 12% of developer respondents said they were delaying projects; no respondents said they were planning fewer projects.

The firm’s solar index prices ranged from $27.20 in the Electric Reliability Council of Texas (ERCOT) to $35.90 in PJM in the mid-Atlantic. ERCOT solar prices have risen nearly 10% since the second quarter of 2020, driven by steady quarterly increases in pricing at ERCOT’s North, South, and Houston settlement hubs, the firm said.

Despite the upticks, ERCOT remains the most competitive solar market in the U.S. as abundant land, a unique market structure, and high insolation provide a favorable environment for solar development.

Solar prices in the California Independent System Operator (CAISO) region fell during the second quarter, down 4.5% compared to the first quarter. Price volatility was due to a lower volume of solar PPA offers compared to other markets, the firm said. And although CAISO has been an active region for renewables, it is not a leading market for offsite commercial and industrial procurement.

Supply chain shifts

U.S. sanctions against Chinese firms for allegedly violating human rights add pressure to an already constrained solar supply chain, the firm said. It said that developers, construction companies, and module suppliers are shifting their supply chains to meet the high demand for solar while also avoiding “problematic suppliers.” The firm said it expected PPA prices to stabilize as new supply chains emerge.

LevelTen said it does not expect rising PPA prices to soften demand in 2021. It said that boards of directors, investors, governments, employees, and consumers will continue to push for sustainability commitments that will require all large energy consumers to turn toward renewables.
And, as the awareness of alleged human rights issues grows, it said that developers “will come under increasing pressure” from stakeholders to ensure the materials for their projects are ethically sourced.

It said that 68% of developer respondents said they were working to improve their practices and tracking related to social and environmental justice as a direct result of buyer preferences.

According to the survey, one-third said they had been asked directly during the PPA proposal process to disclose human rights protections throughout their supply chains. LevelTen said that percentage is likely to increase as awareness grows. It said that renewable developers are “closely examining their sourcing practice,” and will increasingly choose to work with upstream producers that are transparent in their operations, and that have human rights protections in place.

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