Soaring Electricity Prices Outweigh Rising Costs for Solar Sector, KB Securities Says

The solar industry is positioned to benefit as surging electricity prices more than compensate for recent headwinds from higher material costs and interest rates, according to a new research note from KB Securities analyst Wooje Chun.

The report argues that rising power demand, particularly from data centers, is driving wholesale electricity prices to levels that offset increased capital expenditures and borrowing expenses for solar project developers.

Shifting Cost-Benefit Analysis

KB Securities detailed several opposing financial pressures on the solar sector. While costs are rising, the increase in revenue potential from higher power prices is proving to be a more significant factor.

• Module Costs: Prices for solar modules are expected to climb by as much as 32%, from a range of $0.30-$0.33 per watt to $0.38-$0.437 per watt.
• Interest Rates: The yield on the U.S. 10-year Treasury note, a key benchmark for project financing, rose from 4.42% in the second quarter of 2026 to 5.24% as of September 28.
• Electricity Prices: In contrast, three-year PJM power futures reached $89.5 per megawatt-hour on September 28, a 37% increase year-over-year. Similar price jumps were noted in the MISO (up 14%) and ISO-NE (up 15%) markets.

Impact on Profitability

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The analyst note illustrates that the revenue gains from higher power purchase agreements (PPAs) significantly outweigh the increased expenses. For a typical 100-megawatt utility-scale solar plant, a 14% rise in PPA prices could increase revenue by $36.1 million.

In comparison, the recent rise in interest rates would only add approximately $3.3 million in interest expense. The analysis concludes that even with a 16% increase in total investment costs, only a 5.6% hike in PPA prices would be needed to maintain project profitability.

Analyst Top Picks

Based on this market dynamic, the KB Securities report identified two companies poised to benefit:

• Hanwha Solutions (KS:009830): The firm's businesses in utility-scale and residential solar installations are expected to flourish. Additionally, as Hanwha produces 80% of its solar modules in the United States, it directly benefits from the policy-driven increase in module prices.
• DL Holdings Co Ltd (KS:000210): The company's U.S. gas-fired power plants in the PJM market are benefiting from rising power purchase prices while Henry Hub natural gas prices have not seen a corresponding increase, a trend expected to deliver long-term value.