Member Brief: Can Merchant Solar Power Plants Profit in Wholesale Electricity Markets? (June 2016)

Are merchant power plants viable today?

The viability of merchant solar power plants relies on high natural gas prices or alignment of energy and environmental revenues in ways that can manage price risks. Merchant solar projects, which sell directly into wholesale markets without power purchase agreements (PPAs), are as rare as unicorns today. Only a small number now exist out of thousands of PPA projects nationwide. Have solar prices fallen to the point where merchant projects can now sell into markets profitably, bypassing utility contracts altogether? This member brief explores the financials behind solar projects competing against other forms of generation in the electricity markets, rather than against each other, in competitive bidding for utility contracts