Industry Analysis
Feb 2, 2024
Solar PPAs Became Less Valuable in 2023. Here's Why.
The value of a standard, 10-year solar PPA in ERCOT declined slightly in 2023. But the minimal change masks a more complicated story.
Traders' increasingly lower valuation of on-peak power futures reflected their expectations of a worsening 'duck curve' in ERCOT. The further traders looked into the future, the less they valued on-peak power.
The result for solar PPAs was that the first few years became more valuable to offtakers, while the later years became a lot less valuable.
Net, the devaluation of the long-term outweighed the appreciation of the short-term, hence the value trends shown below.
Specifically, here's how the values changed from January to December, according to our SWRV methodology:
- Houston Hub: -6% (from $51.14 to $47.88)
- North Hub: -4% (from $45.42 to $43.61)
- South Hub: -1% (from $40.99 to $40.70)
- West Hub: -1% (from $41.42 to $41.04)
