U.S. solar prices rose 8.1% in the second quarter as a Commerce Department probe into tariffs on products from Southeast Asia and soaring input costs stalled solar projects.

According to the Quarterly Index of Renewable Energy Transactions, the increase resulted in a 29.7% year-over-year increase in the total price of wind and solar contracts, known as power purchase agreements (PPAs). Solar PPA prices rose 25.7% from last year.

Economic, logistical and labor market disruptions during the Covid-19 pandemic have intensified since the outbreak of the Russian-Ukrainian conflict, reversing a decade of falling costs in the renewable energy industry.

The cost of wind power contracts in the second quarter increased by 2.5% from the previous quarter and by 33.7% from the same period last year. Wind power prices at Southwest Power Pool surged 16% in the quarter as a lack of transmission capacity hampered development. It is too early to tell whether U.S. President Joe Biden's decision in early June to exempt solar panels from the four Asian countries involved in the investigation for two years from tariffs will ease cost pressures.

In a survey of 50 developers, nearly a third said they needed further assurance that the tariffs would not be retroactive if the Commerce Department reimposed them after a two-year moratorium. Wind and solar contract costs rose for corporate and utility buyers, in line with wholesale electricity prices, which have been linked to higher natural gas costs.

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