UK universities have earned what is believed to be a UK-first: an aggregated renewable power purchase agreement (PPA) across 20 education establishments worth £50m.
The deal, which includes Newcastle, Exeter and Aberystwyth universities, was brokered by not for profit buying group The Energy Consortium. It is sleeved through EDF Energy, TEC’s framework supplier, with renewable onshore wind power provided by Statkraft and Squeaky Energy, which claims to have “productised” PPAs, acting as the distribution provider.
The corporate PPA market has long been touted as a means for larger organisations to procure renewable power and enable subsidy-free development. But to date, it has largely been the preserve of very large companies, requiring substantial commitments from buyers. Contractual complexity has also limited PPA uptake, particularly among risk-averse sectors.
However, TEC said its most recent OEUJ framework enables universities to minimise risk and maximise flexibility via PPAs.
It is understood that universities will commit to buying a chunk of renewable power via the contract for 10 years. TEC managing director, Richard Murphy, said that allows universities to protect budget while giving them flexibility, “because they are not committing 100 per cent of annual baseload volume to the agreement.”
He added: “For example, by committing to 20 per cent of baseload via the PPA, if a university subsequently outsources part of its campus, such as student accommodation and volume falls, or they add self-generation energy assets, they have sufficient headroom to allow for future developments.”
Squeaky Clean Energy has been developing this type of structure for some years. Founder Chris Bowden last year told The Energyst it was working to “productise” PPAs, aiming to offer them “right down to a megawatt”, enabling small and mid-sized companies “to buy power like Google”, while cutting contracts down from around 120 pages to 15 pages.
Bowden said the deal, and the framework, was the “culmination of many years hard work” and will “open the floodgates” to many more PPAs being struck in the mid-market.
“Having pioneered the first corporate PPA in Europe back in 2008 for Sainsbury’s, it has been an ambition of the team at Squeaky to democratise the market,” said Bowden. “After several years of development we’ve achieved another first by simplifying, standardising and shrinking the corporate PPA, enabling smaller organisations to access the market for the first time”.
As well as using PPAs to secure long-term offtake deals, Statkraft is amassing a significant virtual power plant in the UK, wrapping together dozens of windfarms, storage and gas assets in order to provide flexibility to the power system. Its VPP now tops 2GW.