Renewable PPA prices shrug off the tariff roller coaster — at least for now

• Solar power purchase agreement prices remain essentially unchanged since the end of 2024, while wind PPA prices declined slightly in spite of uncertain and even adverse policy actions coming out of the Trump administration, according to data from LevelTen Energy's PPA marketplace.
• The average North American solar PPA went for $57.04 per MWh in the first quarter of 2025, up 28 cents from the end of 2024 and 9.8% since this time last year. Wind PPA prices dropped more than 5% during the first quarter, but remain 4.4% higher than last year, according to LevelTen Energy.
• Although an ample supply of solar projects should put downward pressure on solar prices, developers may be reluctant to tighten their margins in the face of policy uncertainty, said Zach Starsia, senior director of the energy marketplace at LevelTen. Data from the next few months could clarify which direction prices are headed, Starsia said.

PPA prices have remained relatively static despite — or perhaps because of — the policy turmoil in recent months, Starsia said.

It's not just the Trump administration's on-again, off-again tariffs that stand to increase costs for solar developers, he said. Renewable energy developers, who rely heavily on the U.S. Army Corps of Engineers during federal permitting processes, have also been impacted by the Department of Government Efficiency's cost-cutting. And talk of revamping or repealing the Inflation Reduction Act — while still seen as unlikely — could hit developers hard, Starsia said.

With a glut of solar projects set to come online in many U.S. markets, long-term analyses suggest that PPA prices should decline. But uncertainty about the future of trade and energy policy in the U.S. seems to have prompted most developers to hedge their bets by maintaining their asking prices — at least for now. Starsia noted that LevelTen closed its first quarter price survey on March 15, before the Trump administration imposed and then scaled back its latest round of tariffs.

“I think there's reasons to be hesitant in the market, because of the volatile federal situation and [questions] about what price a developer can ultimately stand behind,” Starsia said “Developers are willing to tighten the screws when variables are more certain, and they will add more conservatism to their financial models when they don't have that certainty.”

The decrease in wind prices, Starsia said, was harder to explain. Deals in the Southwest Power Pool, which saw average PPA prices drop 10% last quarter, account for most of the 5% continent-wide price decline. That could suggest some market speculation based on talk of expanding the SPP, which Starsia said is seen as a potentially favorable development for wind projects. It could also suggest a rush by buyers and developers to close deals before Trump's outspoken opposition to wind development take full effect, he said.

But with ongoing land constraints and the Trump administration's permitting freeze, there's no reason to believe the market is about to see a sizable increase in new wind projects. And wind energy remains in-demand among large corporate buyers, Starsia said, suggesting that wind PPA prices should continue to climb.

Solar prices, Starsia said, also seem likely to continue their upward trajectory. Because they were subject to tariffs under the Biden administration, the solar industry may be somewhat better prepared to cope with a trade war than other U.S. industries. However, there's little reason to believe prices will decline if tariffs and global tensions continue to rise, Starsia said.

Even so, he said, the relationship between tariffs and PPA prices could prove complicated in the months to come. With current trends calling for a steep increase in energy consumption in the years to come, the value of energy as a commodity seems likely to rise, Starsia said — and if overall electric prices rise, there's very little incentive for solar developers to cut their bids. Policies that could erode demand for electricity — for example, if steep tariffs curb the development of data centers, or slow the adoption of electric vehicles — do have the potential to trigger price cuts, Starsia said.