Pöyry: Shifting solar economics and a PPA opportunity


Pöyry outlines how growth in solar PV is changing within-day power prices, how it impacts flexibility business cases, and touts a new PPA opportunity for businesses keen to secure clean power direct.

The last decade has seen a boom in UK solar PV that is changing the shape of electricity prices across the day and creating new opportunities for demand side flexibility and storage.

The installed solar PV capacity has grown from less than 30MW in 2008 to over 13,000MW at the end of 2018.

Almost all of this capacity was supported by government subsidy schemes: the Renewables Obligation or the small-scale Feed-In Tariff, both now discontinued for new installations.

In 2018 solar PV generated over 12TWh, around 4% of the UK’s annual electricity consumption. Although this may sound modest, it has been sufficient to change electricity prices: removing a lunchtime peak during summer months.

The above chart shows the evolution in average hourly wholesale electricity prices in June and July over recent years – to create distinct early morning and evening peaks.

This presents challenges to owners of solar PV installations – the average price which solar would earn in the wholesale market is now less than the annual average ‘baseload’ price, whereas a few years ago solar would earn a 10% premium to this.

However the changing shape of prices may also present opportunities for those business consumers whose demand is relatively high during the day and lower in the evening.

Such customers should discuss with their supplier how they can access hourly or seasonal time-of-day (SToD) pricing to take advantage of lower summer daytime prices.

The increased within-day price differentials caused by solar generation can also help to support the business case for active demand-side management and battery storage.

‘Price arbitrage’ value can be realised by charging during the mid-day trough and then discharging during the evening peak. This value is unlikely to be sufficient on its own to justify investing in a battery, but it can contribute as one of a number of stacked revenue streams.

With the end of the subsidy schemes, new solar deployment has slowed significantly.

However some new, unsubsidised, installations are being built as the technology cost continues to fall. These tend to be ‘behind the meter’ installations supported by on-site and private wire economics, or large grid-scale projects, often utilising a corporate PPA to provide some revenue certainty.

Pöyry is currently working with an established solar developer to put in place corporate PPAs to underpin its subsidy-free solar portfolio, of which the first 50MW project is being commissioned shortly, and will suit electricity buyers looking to source renewable electricity from an identifiable project from early 2020 for the next 3-10 years.

To find out more, visit www.poyry.com/retail


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