U.S. solar energy prices rose 8.1% in the second quarter as projects were stalled by a Commerce Department investigation into tariffs on products from Southeast Asia and soaring input costs, according to a report published late on Wednesday.
The increase during the period contributed to a whopping 29.7% rise in the combined price of wind and solar contracts, known as power purchase agreements (PPAs), from the previous year, according to a quarterly index by LevelTen Energy that tracks renewable energy deals.
Solar PPA prices are 25.7% higher than last year.
Economic, logistical and labor market disruptions during the coronavirus pandemic have worsened since the Russian invasion of Ukraine, reversing a decade of cost declines for the renewable energy sector.
Wind contract costs were up 2.5% during the quarter, and are up 33.7% from a year ago. Wind prices in the Southwest Power Pool soared 16% during the quarter as a lack of transmission capacity has hampered development. The grid operator serves some of the windiest areas in the nation, including Nebraska and parts of Oklahoma and Texas.
LevelTen said it was too soon to say whether U.S. President Joe Biden’s decision in early June to waive tariffs on solar panels from the four Asian nations involved in the probe for two years would alleviate some of the cost pressure.
In a survey of 50 developers conducted by the firm, nearly a third said they needed further assurances that tariffs would not be applied retroactively if the Commerce Department implements them following the two year pause.
The higher cost of wind and solar contracts for corporate and utility buyers has tracked that of wholesale electricity prices, which are tied to the rising cost of natural gas, LevelTen said.