In an ever-changing, evolving global economy, renewable energy developers and investors are looking for the panacea that encourages continued economic growth and revitalizes new project development in the United States’ renewable energy sector. As investor-owned utilities (IOUs) achieve required state renewable portfolio standards (RPSs) levels, their willingness to seek even more power purchase agreements (PPAs) for renewable energy projects appears to be declining. Additionally, corporate off-takers have become more discerning in who they are willing to contract with for their renewable energy off-take requirements. The combined pressures of fewer PPAs in the market and increased demands imposed by potential off-takers has made the U.S. quite a competitive renewable energy market. The present transitional market phase has created challenges for both power producers and integrators. For the U.S. to continue progress towards scalable levels of renewable energy deployment, near term solutions must be implemented during this time of market uncertainty.
The challenges in the market are compounded by a reduction in the size of contracted megawatts (MW) under available PPAs.58 This makes cost reductions from economies of scale even more difficult. Opportunities to secure PPAs of 200 or 300 MW under a single contract are increasingly scarce and hyper-competitive. Developers and investors are now looking for opportunities to aggregate potential projects from a single energy off-taker in multiple or serial stages.
Originally published in American Council On Renewable Energy (ACORE).
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