Capture Price
Definition
A capture price is the average wholesale price a generator earns, weighted by its output in each hour: the sum of hourly output times hourly price, divided by total output. Comparing it with the simple average price shows whether the generator produces in high- or low-price hours. Berkeley Lab measures the same idea as a value factor, 'the ratio of solar's average market value to the BA-average market value of a flat block of power (i.e., a 24x7 block).'
Why it matters
Projections that use average or forward baseload prices overstate what a solar or wind project will earn in the market. The gap widens as more of the same technology is built. Investors should check whether merchant revenue assumptions use a generation-weighted price and how that price is expected to change.
Common misconceptions
- •A forward baseload price is not what solar will earn.
- •A falling capture price is not a sign of poor operation; it reflects when the region's solar produces.
- •Batteries can raise effective capture prices by shifting energy, at a cost.
- •The label is only a starting point. Investor outcomes usually depend on the governing documents, cash-flow priority, valuation policy, disclosure quality, and manager discretion surrounding the term, not just the shorthand definition used in marketing materials.
Technical details
Worked example (illustrative)
Four hours with prices of $20, $25, $60 and $90 per MWh: flat average $48.75.
A solar project produces 100, 80, 20 and 0 MWh in those hours.
Revenue: $2,000 + $2,000 + $1,200 + $0 = $5,200 on 200 MWh.
Capture price: $26.00 per MWh, about 53% of the flat average.
Berkeley Lab, 2024 (Utility-Scale Solar 2025 Data Update)
Solar's market value fell to $32/MWh nationally in 2024, from $48 in 2023.
CAISO had the lowest standalone solar value at $18/MWh.
Generation profile was the largest source of difference between solar and a flat block.
How investors apply the term
Investors usually apply this term by tying the definition back to the controlling documents and then asking which cash flows, rights, restrictions, or valuation assumptions it changes. A useful review looks at the term alongside fees, leverage, liquidity, reporting frequency, and manager discretion rather than treating it as a standalone concept.
The practical diligence test is simple: identify who benefits if the assumption is wrong, who has control when conditions change, and what evidence the investor receives after closing. Terms that cannot be reconciled to documents, cash movements, and monitoring data should be treated as marketing shorthand until proven otherwise.
Frequently asked questions
- Why can solar earn less than the average wholesale price?
- Because all solar in a region produces in the same daylight hours, pushing prices down in exactly those hours. Berkeley Lab found solar's value factor 'reaching 80% in 2024 as the national average,' lowest at 30% in CAISO, where solar's penetration was about 30%, and highest at 181% in SPP, where it was about 1%.
- How is a capture price calculated?
- Multiply each hour's output by that hour's price, add the results, and divide by total output. The worked example below shows a project whose capture price is about half the flat average.
- Does a PPA remove capture price risk?
- A fixed-price physical PPA paid on delivered energy does. A virtual PPA that settles on hourly hub prices also does for the settled volume, but the project's merchant output and any period after the contract ends remain exposed.