Did Philip Melanchthon teach penal substitution?
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A great place to look for this is Melancthon's Defense of the Augsburg Confession. As we'll see, he does not always use language specific to penal substitution, but the themes of Christ's sacrifice appeasing God's wrath and acting as a forensic substitute for sinners are certainly there.
Christ makes satisfaction and his mercy is set against God's wrath:
[Christ] was given for us in order that He might make satisfaction for the sins of the world, and has been appointed as the [only] Mediator and Propitiator. (Part 2)
Thus, because faith, which freely receives the remission of sins, sets Christ, the Mediator and Propitiator, against God's wrath, it does not present our merits or our love (Part 2)
Therefore this Propitiator thus benefits us, when by faith we apprehend the mercy promised in Him, and set it against the wrath and judgment of God. (Part 5)
The appeas*m*nt of God's wrath:
The wrath of God cannot be appeased if we set against it our own works, because Christ has been set forth as a Propitiator, so that, for His sake, the Father may become reconciled to us. (Part 5)
The application of Christ's righteousness to sinners:
Moreover, in this passage [Romans 5], to justify signifies, according to forensic usage, to acquit a guilty one and declare him righteous, but on account of the righteousness of another, namely, of Christ, which righteousness of another is communicated to us by faith. (Part 9)
The second matter in a propitiator is, that his merits have been presented as those which make satisfaction for others, which are bestowed by divine imputation on others, in order that through these, just as by their own merits, they may be accounted righteous. [...] Thus the merits of Christ are bestowed upon us, in order that, when we believe in Him, we may be accounted righteous by our confidence in Christ's merits as though we had merits of our own. (Part 26)
to be justified does not mean that a righteous man is made from a wicked man, but to be pronounced righteous in a forensic sense (Part 8)
And Christ as the price for our sins:
But the Fathers knew the promise concerning Christ that God for Christ's sake wished to remit sins. Therefore, since they understood that Christ would be the price for our sins, they knew that our works are not a price for so great a matter [could not pay so great a debt]. (Part 3)
And finally, Christ the victim bearing the punishment of sin on our behalf:
the Law condemns all men, but Christ, because without sin He has borne the punishment of sin, and been made a victim for us has removed that right of the Law to accuse and condemn those who believe in Him, because He Himself is the propitiation for them for whose sake we are now accounted righteous. (Part 6)
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