Solar, Wind PPA Prices in North America Surge Due to High Project Costs

Solar PPA prices drop in Europe for the first time in two years, and wind continues to surge


Solar and wind power purchase agreement (PPA) prices in North American and European Countries have considerably risen due to increasing capital costs, regulation uncertainties, and supply chain difficulties.

These findings were published by the renewable energy transaction infrastructure company LevelTen Energy.

The company tracks clean energy price movements across North America and Europe using price indices based on PPA offers uploaded to the LevelTen Energy Marketplace by wind and solar project developers.

North America

For countries in North America, the average offer prices for solar and wind power purchase agreements (PPA) have increased by 6.6% year-over-year (YoY) to ~$50.32/MWh in North America in the first quarter (Q1) 2023.

Solar PPA prices were up 8.5% YoY to $49.52/MWh, and wind prices were up by 4.9% (YoY) to $51.12/MWh.

US PPASource: LevelTen Energy

However, wind PPA prices have shown mixed trends in various regional electricity markets in North America. Wind prices decreased by 10.3%, in the Electric Reliability Council of Texas (ERCOT). In comparison, wind prices rose by 20.7% in the Southwest Power Pool (SPP) and 9.4% in the Midcontinent Independent System Operator (MISO). The report suggests that growing wind penetration in the SPP is impacting market dynamics in the region and causing a more challenging financial picture for wind facilities.

The report also notes that solar prices are up across all Independent System Operators in North America, ranging from 4.4% in PJM to 13.6% in MISO. However, the report attributes the 13.6% increase in MISO to changes in the project development process, which now requires more upfront capital from developers to remove speculative projects from an overcrowded queue, adding costs and financial risk.


In Europe, solar PPA prices dropped for the first time in two years, with solar prices down by 4.7% quarter-over-quarter (QoQ) to €73.20 (~$80)/MWh.

However, the prices were still higher compared to the previous years. The Q1 2023 solar prices were still 47% higher than Q1 2022 and 76% higher than Q1 2021.

The QoQ drop does mark a noticeable change from the skyrocketing prices the solar industry has been experiencing for the past two years.

The report notes several reasons for the drop in prices, with the primary driver being supply chain difficulties brought on by the pandemic are now diminishing as manufacturers ramp up production and logistical challenges resolve. Also, although compensated by higher interest rates, the gradual decline in inflation provides developers with improved visibility into their capex costs, which means fewer uncertainties to factor into PPA prices.

In addition, the drop in natural gas and wholesale electricity prices is adding pressure on developers to decrease their PPA prices to remain a competitive option for buyers.

However, in Spain, Europe’s most active solar PPA market, prices continued to climb, rising 9.8% during Q1 and 32.2% year-over-year. The report suggests that Spain’s low-priced solar PPAs have made it an attractive market for corporate clean energy buyers.

Europe PPASource: LevelTen Energy

Meanwhile, wind prices in Europe have continued to rise, with project developers facing permitting barriers and rising costs pushing prices up by 35% over the last six months. Wind PPA price offers in Europe increased by 35% to €106.06 (~$115)/MWh between Q3 2022 and Q1 2023.

However, the European wind energy sector faces challenges that have pushed prices up by 35% over the last six months. Project developers struggle with permitting barriers and rising costs, resulting in fewer wind offers for anonymized data.

LevelTen’s overall index of wind and solar power purchase agreements across European markets rose 56% yearly, at €88.88 (~$97)/MWh.

According to a Lawrence Berkely National Laboratory report, utility-scale solar projects’ LCOE decreased by about 85% in the U.S. since 2010 to $33/MWh in 2021.

A recent Legal and General Investment Management report said that Europe would experience high energy prices in the coming years if sufficient decarbonization funding is delayed by another decade.