The market for renewable power purchase agreements (PPAs) is showing increased capacity despite challenges in the sector, according to new research by Cornwall Insight.
The researcher’s ‘Renewable PPA market share report’ assessed a total of 30,710MW of renewable PPA capacity, a 1190MW increase from its previous report that assessed capacity as of September 2020.
Cornwall Insight analyst Lee Drummee said: ”Corporate Power Purchase Agreements (CPPA) have been increasing in recent years as the market matures and generators seek alternative routes to market to use subsidies.
“The majority of CPPAs that we have identified have been signed with new-build subsidy-free projects, with solar PV and wind the preferred technologies akin to a more positive attitude from the public towards these asset types, as well as their levelised cost advantages.
“The length of CPPAs analysed in the report varies considerably, ranging between four and 25 years, with the most common deal lengths being 10 and 15 years.
“The longer-term deals tend to be signed with new build projects, needing greater revenue security to develop.”
He said that while subsidy-free PPAs have been more common with corporate buyers, subsidy-free deals between utilities and generators have gained traction.
Drummee added: “Since we actively began to track these deals in August 2019, we have identified PPAs for 3.8GW of new build capacity.
“Whilst the vast majority (2.5GW) is with CfD assets. Large portions are also made up of subsidy-free CPPAs (890MW) and subsidy-free utility PPAs (420MW).
“Over the same timeframe, approximately 2.1GW of existing assets signed new PPA deals, with 1.9GW being signed with a utility offtaker and just 120MW purchased by a corporate buyer.
“While liquidity in the long-term PPA market seems to have improved, right now, developers will be weighing up their options between CfD Allocation Round 4 and alternative routes to market such as utility PPAs and CPPAs.
“Away from PPAs for new build assets, we noted that activity in the short-term PPA market has been buoyed by the continued rise in power prices with competition levels remaining high.
“However, recently levels of volatility in the wholesale market are creating a different set of challenges, often making fixed priced deals more challenging to offer.”