Independent renewable generators are striking shorter term deals with offtakers in the hope that depressed power prices will rise, according to a specialist platform Renewable Exchange.
The firm was founded by former Ovo trader Robert Ogden to provide a route to market for smaller generators to sell power to licenced suppliers.
In its first full year of trading, the Bristol-based platform has attracted more than 900 generators controlling 1.5GW of contractable capacity. Assets committed range in size from barn roofs of 100kWp or less, to portfolios of 20MW-plus, according to chief commercial officer Chris Smith, who said buyers and sellers appreciate flexibility they may not get elsewhere.
“We have found a niche, and we can enable deals which other platforms miss,” suggested Smith, citing the ability to contract with individual offtakers and to respond quickly to price volatility as valued attributes.
Unlike other PPA platforms, Renewable Exchange isn’t yet addressing corporate PPAs. Its 34 off-takers are all suppliers and licenced re-sellers, including Ecotricity, Smartest Energy, Limejump and EDF. However, he said an increasing number of smaller suppliers are coming to the platform to source renewable power and Renewable Energy Guarantee of Origin (REGO) certificates.
Corporate market not there yet
Renewable Exchange does not see corporates seeking green PPAs for self-consumption as a priority. “They’re not really our target at present” said Smith. “Particularly at the smaller end, as they still require a little education”.
This week the firm added solar farm owner IB Vogt to its platform. The German developer used the platform to contract power from 10MWp of solar farms in Hampshire. The auction attracted nine PPA providers, with Ecotricity winning out after three rounds. Even in the final round, bids varied in value by as much as £3/MWh, according to Renewable Exchange, underlining the potential upside for asset owners.
Smith declined to disclose the price struck, citing commercial confidentiality. But he pointed to the German firm’s participation as a sign of growing confidence in the platform.
“We are enabling generators big and small to conserve value in today’s difficult wholesale markets”, he said.
In January Aviva Investors used Renewable Exchange’s platform to close 23 PPAs with offtakers for power from 35.5MWp of its onshore wind farms, praising the platform’s “resource light” simplicity.
Utility-scale storage linked to renewable assets is yet to feature in the platform’s deals, said Smith, though owners are assessing its potential value. “In terms of PPAs, [storage] does change the dynamics, as generally asset owners look more at the day ahead market, rather than any longer term fixed prices,” said Smith.
The platform supports contracts of up to 36 months. In practice, Smith said, parties are contracting on deals of six months or shorter, in the hope that wholesale prices weighed down by a glut of gas on world markets and the UK’s warm winter, must at some point turn the corner.
“PPA prices have really suffered with the collapse in power prices, which has seen further declines since December 19,” Smith stated.
“We are seeing parties go for shorter and shorter terms as they look to avoid locking in low prices. If buyers or sellers see no point in contracting long, it’s in our interest to let them set shorter terms.”