An Empirical Analysis of Avoided Cost Rates for Solar and Wind QFs Under PURPA

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This analysis compares contract rates for solar and wind generation set pursuant to the Public Utility Regulatory Policies Act (“PURPA”) to contract rates set in the competitive market. The analysis is performed by examining a sample of contracts executed between utilities and solar and wind generation facilities that qualify assmall power producers – qualifying facilities or “QFs” – under PURPA. Our analysis of a sample of 708 QF contracts representing approximately 8,000 megawatts (“MW”) shows that the QF contract rates consistently exceed market-based contract rates for solar and wind energy. Further, we find that these QF contract rates do not reflect the price change observed in competitive markets.

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