As Biden left office, the U.S. renewable energy industry looked strong. On the one hand, the Net Zero Consortium for Buyers (NZCB) Virtual Power Purchase Agreement (VPPA) Opportunity Index modeled financial outcomes became slightly less favorable across the U.S. market for wind and solar. But on the other hand, the NZCB RFP- and reverse auction-based procurements continued to show modeled financial outcomes far superior to market averages. The NZCB closed several transactions showing cost-positive modeled backcast and expected forecast financials, with more conservative, less likely modeled financial outcomes on par or better than far less impactful alternatives.
Unleashing American Energy: Monitoring Impact
Just a few weeks into Trump’s nascent second-term administration, he has already cast many recent wins in doubt. Trump's sweeping executive orders include blocking new wind farm construction, halting electric vehicle tax credits, and stopping the dispersal of Congressionally approved funds allocated by the Bipartisan Infrastructure Law and Inflation Reduction Act to support solar panel and wind turbine manufacturing.
With active U.S. renewable energy procurements in ERCOT, SPP, MISO, and North Carolina, SR Inc will monitor these developments in real time, including the status of numerous legal challenges the industry has already filed. We remain committed to helping Member-Clients meet their enterprises’ growing demand for renewable energy. Regardless of how the executive orders hold in court, we are confident that buyers will continue to leverage the high-level of competition in NZCB procurements to negotiate buyer-favorable pricing and terms with finalist developers and continue to find creative ways to address market and political uncertainty during the contracting process as the VPPA market remains strong in 2025.
Q4 NZCB Transaction Activity
In Q4 2024, SR Inc guided and represented over a dozen Member-Clients in aggregated VPPAs through the NZCB.
During that time, the NZCB:
With our initial 1 GW goal achieved, the NZCB now focuses on our new bold target: 10 GW of VPPA advanced market commitments (AMCs) for new renewable energy through 2030.
Why Transact with the NZCB?
Many SR Inc Member-Clients with geographically dispersed electric loads are keenly interested in the impact and scalability of VPPAs. GHG accounting rules make this appeal particularly strong in the U.S. / Canada and Europe’s AIB countries, where companies can apply the energy attribute certificates (EACs) to any sites within the respective boundaries.
Despite their appeal, conventional VPPAs are typically out of reach for all but the largest, most geographically concentrated energy users. When most SR Inc Member-Clients aggregate their load across the U.S. / Canada or European AIB countries, they still lack sufficient scale to command the transaction structure, ESG impact terms, and pricing needed to make VPPAs favorable to buyers.
VPPA 2.0: Democratizing Utility-Scale Clean Energy Procurement
Fortunately, SR Inc’s NZCB offers a different approach. With VPPA 2.0, Member-Clients can create economies of scale, experience, and intellect by aggregating their demand. This auditable corporate procurement process, distinguished by its Reverse Auctions, has become core to many SR Inc Member-Client decarbonization strategies. Together, SR Inc Member-Clients have made the NZCB the leading platform for corporate buyer-aggregated utility-scale renewable energy procurement, expanding access to clean energy’s environmental and financial benefits beyond its former high-load, high-concentration niche.
VPPA Pricing Patterns
Overall conditions in the U.S. VPPA market eased for corporate buyers in 2024 compared to much of 2022 and 2023, but the new Trump administration brings much uncertainty to the industry in 2025. SR Inc’s aggregated procurements have returned to securing mature projects with full hub settlement, zero price floors, firm pricing, and shorter terms despite continuing developer risks.
U.S. VPPA pricing remained high in Q4 2024 for financial, technical, and other unpredictable reasons:
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Financial |
Technical |
Other |
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Basis Risk |
Interconnection backlogs |
Tariffs |
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Insurance Costs |
Transmission constraints |
Severe weather |
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High financing rates |
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Record-high corporate demand |
What direction are prices going? SR Inc sees early signs that easing solar supply chain pressures may facilitate VPPA price stability or reductions. However, the new administration means uncertainty abounds. We will closely monitor tariff expansions, Inflation Reduction Act adjustments, and any other unpredictable clean energy policy impacts the new administration may provide. Throughout active and recently closed transactions, the NZCB’s creative solutions more than matched uncertain conditions. We expect the 2025 VPPA market to remain strong.
VPPA Factors to Monitor
PC EACs for Market Credibility
The growing concern about the reputational risks of unbundled EACs has driven increased pricing for purchaser caused EACs for several years now. (For unfamiliar readers, PC EACs are generated by a project caused by its procurement via a long-term transaction that enabled the project to get financed.) Corporates are demonstrating a willingness to pay for more credible EACs that have unequivocally caused new renewable energy capacity to be built.
Following 2022 and 2023’s steep VPPA price increases, 2024’s increases have been much more modest. The modeled cost of buyer-favorable, VPPA-sourced EACs (i.e., what SR Inc Member-Clients call purchaser-caused EACs) rose $3.75 per EAC on average across wind and solar in all U.S. hubs over the last year as the volume of closed VPPA transactions remains high (closed deals averaged 14GW/year in 2021 through Q3 2024). While the average modeled U.S. VPPA cost $16.36 in Q4 2023, it cost $20.12 ($17.00 for solar and $23.24 for wind) in Q4 2024. These increases reflect the market value of U.S. PC EACs. However, SR Inc procurements achieve significantly better results than that average, thanks to the NZCB’s professionally managed U.S. and European competitions, culminating—as mentioned above—in Reverse Auctions shaped to benefit corporate buyers.
AI Energy Surge
Another factor SR Inc’s NZCB monitors closely is historical and projected earned wind and solar prices across hubs. In Q4, our 22-year earned price indicator increased 10% for wind and increased 7% for solar across active VPPA hubs compared to the prior quarter. After decreasing the prior two quarters, this indicator’s increase likely stems largely from increasing gas prices and futures, which influence electricity’s realized prices and forecasts.
Record-high electricity demand growth influences this spike. Recent articles and studies continue to highlight the surge in power usage driven by factors including AI data center proliferation, continued cloud migration, cryptocurrency mining, manufacturing onshoring, electrification including the migration to EVs, and the adoption of emerging technologies like green hydrogen and battery energy storage. This unprecedented demand for renewables and fossil fuels will likely put upward pressure on prices, although recent news about China’s highly efficient DeepSeek AI model has thrown in some doubt.
Recent examples include:
Electricity price projections expect this demand increase to counter the downward price pressure from low natural gas prices and the addition of more renewable energy and storage (with zero marginal costs) to the grid.
To better quantify U.S. VPPA market dynamics, the NZCB has published the NZCB VPPA Opportunity Index quarterly since 2019 to help advance SR Inc’s mission to accelerate the development and adoption of best practices in more sustainable business. The NZCB VPPA Opportunity Index enables a comparison of potential wind and solar VPPA performance across U.S. hubs using common analytics. It reflects both prior actual (backcast) performance and forward carefully modeled pricing and is based on proprietary SR Inc analytics and key data sources including those provided by SR Inc data providers LevelTen Energy and REsurety. We call reader attention to the fact that the Index is based upon VPPA offers, not executed transactions, made over the prior quarter.
Key findings from SR Inc’s NZCB Q4 analysis include:
The NZCB VPPA Opportunity Index intentionally simplifies complex markets. Nevertheless, many NZCB participants find the rendering helps them begin to understand the market dynamics and financial implications of VPPA-based renewable energy strategies.
When NZCB participants wish to pursue specific VPPA opportunities, SR Inc offers stakeholder briefings and detailed, customized analytics before transacting. This bespoke financial, legal, and market expertise helps VPPA offtakers to develop a timely procurement strategy; implement the procurement strategy in an auditable way; and structure, contract, and negotiate the transaction in a buyer-favorable manner. SR Inc supports NZCB buyers throughout the corporate procurement process, helping them to navigate rapidly changing markets.
*Methodology
Data Sources
If you have any additional questions, or would like to learn more about the NZCB, contact info@sustainround.com.