The renewables power purchase agreement (PPA) market has seen a “significant rise” in the £ per megawatt-hour value achieved by generators, according to Cornwall Insight.
The PPA market continues to be highly competitive, according to the latest survey results from Cornwall Insight, with the rise in £/MWh value having increased mainly in the short-term market, covering deals 1-3 years in length.
This has been driven by higher wholesale power prices and is especially notable in the feed-in-tariff (FiT) market.
A growing number of FiT generators opt for PPAs instead of the administered export rate.
Lee Drummee, analyst at Cornwall Insight, said: “According to our PPA market share report, more parties are entering the market. In particular, smaller green suppliers looking to back renewable energy supply tariffs against green power purchased directly from generators, instead of or alongside Renewable Energy Guarantees of Origins (REGOs).
“As such, the renewables PPA market remains highly competitive with value retention levels for generators remaining high amid a competitive offtake market.
“Some offtakers have even reported that winning PPA bids in competitive tenders and auctions appear to be mispriced or loss-making.
“Looking ahead, developers of new-build assets are continuing to assess their best route to market options ahead of the fourth Contracts for Difference (CfD) allocation round.
“These project developers are approaching many offtakers; however, developers also weigh up the CfD versus alternative routes to market such as corporate PPAs and utility PPAs.”