U.S. solar energy contract prices have soared by a third over the past year as project developers have struggled to get imported panels, according to a report published late on Monday.
But wind energy prices fell a little in recent months, thanks to major new federal subsidies.
Fourth-quarter prices on solar contracts, known as power purchase agreements (PPAs), were up 33.3% on a year before and 8.2% on the previous quarter, according to a quarterly index by LevelTen Energy that tracks renewable energy deals.
The supply chain constraints have dampened the benefits for solar developers of President Joe Biden’s landmark climate change law, which late last year extended tax credits for renewable energy projects.
The Inflation Reduction Act’s incentives have breathed life into the U.S. wind industry. Wind PPA prices were 1.9% lower in the fourth quarter than in the third – their first decline since early 2021.
The spike in solar prices resulted from the seizure by U.S. customs officials of hundreds of shipments of solar energy components at U.S. ports since June. A law went into effect at that time banning imports from China’s Xinjiang region.
The Uyghur Forced Labor Protection Act presumes that all goods from Xinjiang are made with forced labor. It permits imports only if producers prove otherwise by showing sourcing documentation of equipment back to the raw material.
“Those delays and access to that equipment is introducing significant amounts of uncertainty on timelines, and therefore PPA prices are going up to cover that risk,” LevelTen Senior Director of Developer Services Gia Clark said in an interview.
Clark added, however, that demand was still strong for solar projects and that prices might stabilize in the second half of 2023.