Price cannibalisation could become a barrier for future renewables deployment if no action is taken, Scottish Renewables’ onshore wind conference has heard.
RES head of external affairs Rachel Anderson (pictured) told delegates today that “if the market continues without any changes we will still continue to get power price cannibalisation”.
Price cannibalisation is the “depressive influence on the wholesale electricity price at times of high output from intermittent, weather-driven generation such as solar, onshore and offshore wind”, according to Cornwall Insight.
Anderson added that fears around the issue had meant that when the government upped its offshore wind target from 30 to 40GW this hit share prices of a number of infrastructure funds.
She said investment in technologies such as green hydrogen, which could provide a secondary market for renewables, was needed now.
Anderson said that PPAs and merchant projects might continue to have a role in addition to CfDs but merchant projects were likely to only be viable for some players such as large infrastructure funds.
A poll of session participants suggested 45% thought CfDs would be the main financing route. However, 34% thought blended finance models would be key to onshore wind projects.
Meanwhile, Renewable Parts head of sales Gordon Mina argued that refurbished parts could play an important role helping make project finances stack up, although work is needed to ensure older machines can be made grid compliant.