Statkraft has signed a seven-year power purchase agreement (PPA) with Luminous Energy, covering output from a 29MW solar farm in the UK.
Guy Lavarack, Chief Investment Officer from Luminous Energy, said Statkraft’s “market leading” position, virtual power plant system and ability to manage the complex metering arrangements convinced the company it was the best counterparty to appoint for Luminous’ first operational solar farm.
Luminous Energy has successfully secured fixed power prices for almost all of the output from its Bracon Ash solar farm in Norfolk via two separate sources.
These comprise a Contract for Difference (CfD) from CfD Allocation Round 5 and a virtual corporate power purchase agreement (PPA) with Bristol Airport.
It is believed to be one of the first projects to combine these two financial instruments for a single solar farm, guaranteeing fixed income for much of its output.
As well as providing balancing services, Statkraft’s PPA accommodates different pricing for the two portions of the solar farm and provides additional security of offering physical hedges prior to the financial contracts commencing.
This optionality “allows further price certainty and the potential to secure high prices in the period immediately before the other contracts commence”.
Statkraft’s downregulation service is an important benefit to Luminous Energy of this PPA.
By responding to a price trigger set by Luminous Energy and curtailing the project remotely, Statkraft will prevent Bracon Ash from generating during negative price periods and incurring unnecessary costs whilst also relieving pressure on the grid.
Statkraft can manage this risk for generators via its well-established Virtual Power Plant (VPP) system, which already manages its renewables PPA portfolio in Germany and elsewhere in Europe, and optimises the flexible generation portfolio in the UK.
Statkraft’s UK Markets team has previously signed CfD PPAs for onshore and offshore wind projects from AR1 in 2015, and AR3 in 2019.
Since onshore wind and solar were re-introduced to the CfD auction process, a large number of projects have been successful.
Michelle Lam, Statkraft’s PPA Business Development Manager, said: “Finding new solutions to maximise the returns on behalf of our customers is in our DNA at Statkraft.
“That’s why it’s been particularly exciting to work with Luminous Energy on this unique PPA.
“Statkraft has once again proven its innovative approach and willingness to think creatively on behalf of our customers to meet their requirements, and to optimise the options available in the market.”