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The price of electricity generated by renewable power sources in North America has added almost 30 percent over the past year due to fast-rising development costs coupled with more robust demand.
This is the conclusion of a report by LevelTen Energy, the operator of the largest power purchase agreement marketplace in the world and 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,” the authors of the report said.
“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,” they explained.
This combination of developments has led to a 9.7-percent quarterly increase in the prices of power purchase agreements to almost $40 per MWh, and a 28.5-percent 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 complained that they are having to shrink their business amid an increasingly unfavorable business environment.
“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 kind of pressures,” she added.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com