Energy Transition

RENEWABLES ON CONTRACT | How Green Energy Locks in Profits

byAdam Robinson, Enverus Intelligence® | Research (EIR) Contributor

Since 2020, the demand for power purchase agreements (PPAs) has surged, driven by tax incentives, corporate clean energy goals, and increasing power needs. Data centers and the push for 24/7 clean energy matching are further accelerating this trend. The rapid development of U.S. renewables has shifted the market dynamics, creating a buyers’ market where PPA durations have shortened to 10-15 years, which is less than the lifespan of most assets, due to off-taker preferences. 

Given this shift, it is crucial for developers on both sides to understand PPA price trends. By comparing the after-tax levelized cost of energy (LCOE) for solar projects in the interconnection queue with the operational capacity for 2024, optimal PPA prices for 2025 can be determined (see Figure 1). Most markets show solar projects meeting PPA demand at $20-$30/MWh, whereas NYISO’s LCOEs are closer to $50/MWh due to weaker solar resources and higher costs. With solar growth outpacing wind, Wright’s Law suggests that solar costs will decrease more rapidly post-2025, making a low LCOE essential for developers to secure PPAs in an increasingly competitive market. 

Research Highlights

About Enverus Intelligence® | Research

Enverus Intelligence® | Research, Inc. (EIR) is a subsidiary of Enverus that publishes energy-sector research focused on the oil, natural gas, power and renewable industries. EIR publishes reports including asset and company valuations, resource assessments, technical evaluations, and macro-economic forecasts, and helps make intelligent connections for energy industry participants, service companies and capital providers worldwide. See additional disclosures here.

Picture of Adam Robinson, Enverus Intelligence® | Research (EIR) Contributor

Adam Robinson, Enverus Intelligence® | Research (EIR) Contributor

Adam Robinson joined the Enverus Intelligence® Research team as an Energy Transition Analyst in October 2024, focusing on supporting sustainable energy solutions. He holds a degree in Chemical Engineering from the University of Calgary and brings hands-on experience in pipeline integrity engineering. With a strong foundation in pipeline systems and integrity management, Adam is passionate about leveraging data-driven insights to optimize energy infrastructure and enhance system reliability.

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