A Growing Appetite For Merchant Solar

The steady decline in the cost of solar projects has created new opportunities for project owners to sell power directly into wholesale markets. As the ITC ramps down, the US solar industry’s future growth will depend on its ability to compete with traditional generation sources in these markets. As solar plants reach grid parity, they will behave like incumbent generation sources, with a greater part of the plant’s revenue coming from the merchant market. 

Furthermore, the recent price spikes in markets such as ERCOT have further captured the attention of project developers and financiers.  Of course, access to these markets does not come without risk.  Merchant solar has a variety of risks that traditional Power Purchase Agreements (PPA) do not. As a result, financial instruments have been adopted to value and reallocate these additional risks. 

To better understand the latest trends in the merchant solar market, Solar Asset Management North America (SAMNA) hosted a panel on the subject at their 2019 conference in San Francisco. Considering the concepts presented at the SAMNA Panel, this white paper explores the most common risks associated with going merchant, the financial products that can mitigate these risks, and the associated operational considerations.