Breaking Down South Solar Matches
In 2023, 16 energy companies turned to RenewaFi to prospect for solar PPAs at ERCOT South Hub.
They posted 109 prices (97 offers to sell and 12 bids to buy), which resulted in two matches:
- $39.75 for a 10-year PPA with a prompt year start.
- $45.00 for a 20-year PPA with a 2026 start.
The matches fell within the overlap between the bid prices and the offer prices, as shown in the chart below.
The chart, a density plot, shows how frequently different prices were posted. Bids were most often around $43 and offers around $48.
Interestingly, the first match was “in the money” to the counterparty by 10%. The second match was just “out of the money.”
We calculate whether a price is in or out of the money by subtracting the offer price from the theoretical value of the energy and RECs contained in the offer.
We call this theoretical value “SWRV,” which stands for the Shape Weighted RenewaFi Value.
The following chart shows the average offer prices by month (the red line) compared to the average SWRV by month (the yellow line). Offer prices were most competitive in June and November.
As expected, that’s when the two matches occurred.
