To get a look behind the numbers for wind and solar in Q2 2019, LevelTen conducted a survey of developers in renewable markets. Download the full report here.

The report found that, overall, PPA prices still remain low. Wind and solar prices saw a slight average increase of $0.18 per megawatt hour (MWh), or 1.2% quarter-over-quarter.

LevelTen’s report covers five independent system operator (ISO) regions in the United States, including CAISO, ERCOT, MISO, PJM and SPP. In addition, the report includes a survey of renewable energy developers with projects on the Marketplace.

This quarter, LevelTen asked developers what had the largest impact on their PPA offer prices in Q2, and whether they expect prices to increase, decrease, or stay about the same in 2020.

The following are a few key takeaways from Q2 2019:

• In Q2, PPA offer prices rose, but not dramatically. Across markets, an evenly-weighted index of P25 wind and solar prices increased $0.18 per megawatt hour (MWh), or 1.2% quarter-over-quarter. It’s not the first time prices have increased; the P25 index also increased slightly from Q3 to Q4 2018, but then dropped from Q4 to Q1 2019.
• Year-over-year, prices have declined. The P25 solar price index dropped 5% from Q2 2019 to Q2 2018, and the P25 wind price index dropped 9%.
• Development costs increased, but so did competition. According to a survey of renewable energy project developers, “competition from other projects” had the largest impact on Q2 prices. Other market factors that impacted prices included “increased engineering, procurement and construction (EPC) costs” and “cost of capital.”
• Most developers don’t anticipate dramatic price changes in 2020. According to the survey, 45.5% of developers think that PPA prices will “stay about the same” in 2020. The rest of respondents were evenly split between prices increasing (27.3%) and decreasing (27.3%).
• PPAs are getting (slightly) shorter. From Q1 to Q2 2019, average contract lengths decreased from 13.8 to 13.5 years for wind projects and likewise decreased from 14.4 to 14.0 years for solar projects.

The LevelTen Marketplace features a vast amount of data on nearly every renewable energy project under development in North America. On the Marketplace, potential buyers can browse through projects and see what price per megawatt hour the developer is offering based on different terms of the power purchase agreement.

The company requires that developers submit offer prices based on a set of standard PPA terms most often requested by buyers. This standardization enables buyers to make an apples-to-apples comparison between projects, and it enables LevelTen to aggregate the data into our quarterly PPA Price Index – a unique position in the industry.

To see the full results and analysis, click here.

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LevelTen has developed an intelligent platform that matches businesses with renewable energy suppliers, and Rob is full of insight about renewable power purchase agreements, corporate buyers, risk, and standardized contracts. Rob also discusses wind energy and the PTC.

LevelTen offers a complimentary step-by-step guide for corporate renewable energy buyers to follow when securing a power purchase agreement and a PPA Price Index, available here:

• 10 Steps to Secure a Virtual Power Purchase Agreement
• LevelTen Energy PPA Price Index

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Starbucks was able to leverage LevelTen’s two-sided market aggregates for PPA buyers and sellers, which lets the parties connect and transact in a more efficient manner.

The portfolio, custom-built for Starbucks using LevelTen Energy’s technology-enabled procurement platform, aggregates three strategically located power purchase agreements (PPAs), each with nearly-identical terms, from three distinct developers. This portfolio transaction, in which a corporate buyer simultaneously procures a fraction of the power generated by multiple new projects, is unprecedented, according to LevelTen.

The PPA portfolio will provide clean power to the electricity grids that serve more than 3,000 U.S. Starbucks stores and communities by 2021, when all three projects are online. This is another proof point of Starbucks continuing to use their scale to drive innovation in the renewable energy sector.

“The Starbucks portfolio PPA demonstrates the promise of new renewable energy purchasing models,” said Bryce Smith, founder and CEO of LevelTen Energy. “Starbucks is setting an important precedent in the corporate energy procurement space by demonstrating how a single off-taker can safely and easily procure shares of renewable energy from a variety new wind and solar projects. This approach enables many more corporate and institutional buyers to support, in a fiscally responsible way, the massive buildout of new clean energy projects across the globe.”

The portfolio incorporates 146 total MW from three new renewable energy projects:

• 50 MW of wind power from an ALLETE Clean Energy project in the SPP market, acquired from Apex Clean Energy
• 50 MW of solar power from a Cypress Creek Renewables project in the ERCOT market
• 46 MW of solar power from a BayWa r.e. project in the PJM market

“As we continue to strive towards building and operating the world’s largest green retail business, we know we need to find innovative business models to achieve our renewable energy goals,” said Patrick Leonard, energy manager for Starbucks company operated stores in the United States and Canada. “Not only does this portfolio model allow us to support new solar and wind farms that will deliver the clean energy equivalent to the electricity powering over 3,000 stores, it also opens the door for many new buyers to cost-effectively source smaller amounts of renewable energy.”

As more corporate and industrial entities seek to procure renewable energy, longtime buyers like Starbucks help guide the industry by supporting innovative PPA deal structures. The portfolio model – much like a mutual fund – minimizes risk and allows buyers to capture the scale pricing benefits of the country’s largest, most economically attractive projects. The geographical and technological diversification inherent in a portfolio also better complements’ Starbucks’ energy footprint and strategy.

The Starbucks’ portfolio was made possible by LevelTen Energy’s Dynamic Matching Engine, software that curates and analyzes massive data sets on clean energy projects under development. This technology, along with the deep market expertise of LevelTen’s team, identifies optimal available project combinations for individual corporate buyers. Companies can then execute PPA contracts, individually, independent of other corporate buyers, or they can choose to partner, explicitly, with other buyers. Starbucks and LevelTen believe that the flexibility and “transactability” offered by the Dynamic Matching Engine, a vital component of the LevelTen Energy platform, represents the future of aggregation.

“The wind power developed by Apex represents the largest wind PPA transacted to-date by Starbucks, delivering over 180,000 megawatt-hours, annually,” said Steve Vavrik, chief commercial officer of Apex Clean Energy. “We are proud to partner with Starbucks and LevelTen Energy at Diamond Spring Wind, one of several Apex projects this year that will help corporations meet their future clean energy goals. The Old Settler Wind project in Texas, owned by Apex and Northleaf Capital Partners, will also provide over 1.5 million RECs to help Starbucks reach its RE 100 goal until commercial operations at Diamond Spring begin in 2021.”

In addition to having attractive, market-leading individual characteristics such as economic competitiveness and low development risk, the three projects were carefully selected to optimize performance of the entire portfolio. Collaboration between the developers and LevelTen through data sharing will enable Starbucks to monitor its renewable energy generation, track portfolio performance, and streamline contract management.

“Starbucks is rethinking the future of retail with their new, innovative ‘Greener Stores’ framework and BayWa r.e. is delighted to support this effort with our partners at LevelTen,” said Jam Attari, CEO, BayWa r.e. Solar Projects LLC. “By contracting a significant portion of the energy from our Fern Solar project, Starbucks will make progress in their commitments while also allowing buyers with different energy needs to access cost competitive energy. This project continues BayWa r.e.’s significant contributions to economic and local community growth in the region.”

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