Vattenfall touts 1MW PPAs to build South Kyle wind farm without subsidies


Vattenfall is touting power purchase agreements (PPAs) as small as 1MW or 3GWh per annum from its South Kyle Wind Farm in South West Scotland.

That means the firms is effectively targeting mid-sized companies as well as corporates. It hopes to convince them to buy renewable power and lock in prices for between 10 and 20 years.

The utility is working with Mitie Energy on tenders to buy the power from the 165MW onshore wind farm, which Vattenfall expects will output around 500GWh per annum. Bids to buy its output can be submitted until June.

In the absence of subsidies for onshore wind, which are currently unable to bid for revenue stabilising contracts for difference (CfDs), corporate PPAs are seen as a route to market by developers.

Vattenfall was granted consent for the South Kyle Wind Farm last June.

Vattenfall’s UK Originator, James Hunt told The Energyst the company aimed to make a final investment decision on the project by the end of this year or first quarter 2019.

“Right now, there are no subsidies available, hence looking at [corporate PPAs] in order to bring South Kyle to financial close,” said Hunt.

He added the company would also welcome any change in policy, given “there is a limit as to how many projects can go down the PPA route” and that domestic consumers are also unable to engage in the PPA market.

Hunt said market feedback suggests companies typically seek to lock in around 20% of their consumption via long-term PPAs, with procurement departments attempting to familiarise themselves with new approaches.

He said the tender should also shed light on what businesses are prepared to pay for long-term price certainty, given open market visibility is usually limited at 2-3 years.

Hunt said he expected the output would fetch “about current market rates” in real terms.

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