Spring 2025 Power Purchase Agreement (PPA) Negotiations must take a greater account of the risk, according to a new report from the Power Insights service from LCP Delta. The research agency has warned that the set -up of strike prices can leave offtakers out of their own pocket, so that future similarities risk the key to supporting the implementation of solar energy.
High exercise prices can block the British Solar PPA market, LCP Delta has warned. It follows a new analysis that has found an unlikely coordination of the market price with favorable weather conditions, has caused a series of profitability.
In a report on Solar PPAs from LCP Delta’s Power Insights Service, the analyst found that PPAS-PPAS-AS production from Solar has produced better than expected, with an average seasonal win for off -takers from GBP 3.15 ($ 3.97)/ MWH from 2019 to 2024. LCP The analysis of Delta claims that the chance of achieving this level of average profit or higher, less than 25% was during the period.
Bertalan Gyenen, report author and a consultant at LCP Delta, said PV -Magazine The analysis was aimed at PPAs with utilities, the species that energy companies buy “as part of their hedge strategy”. These PPAs are purchased a maximum of one year in advance, in contrast to the 10 and 15-year-old PPAs in the longer term that prefer off -takers from companies.
The risk of buying PPAs for buying solar energy is found in two places, said Gyenes. Offtakers must take into account the seasonal prediction in the longer term for generating solar energy, as well as the form costs that will pay the usefulness to balance generating on the day-head-side market for electricity market, when considering the PPA -Exercise price.
Utility companies have benefited from the gaps between PPA exercise price and day-Ahead electricity prices, which according to the analysis of LCP Delta have been drawn up in a complementary way with solar generation.
With the title “The True Cost of Risk”, the report uses the Baseload Market Reference Prize (BMRP) for Great -Britain to represent the Solar PPA strike for each season, which claims it is broadly representative. In 2019 and 2020, the gap between BMRP and day-to-day prices was closely coordinated.
The decision of Russia to keep gas in the summer of 2021, however, led to a peak in electricity prices that corresponded to generating excess. PPA offtakers could sell the surplus with profit, because day-day prices were higher than the PPA exercise price. The gap between long -term seasonal exercise prices and short -term prices remained, which increased between 2021 and 2023, driven by the evolution of gas prices.
By analyzing the gap between day-air prices and PPA exercise prices in addition to the difference in seasonal average generation and the volume of solar generation covered in PPAs, LCP Delta found a series of seven consecutive profitable seasons. It was a result with 0.8% probability, according to the analyst.
The profitable periods include four half -year seasons in which the average market price for electricity day was lower than the exercise price during a lack of generation, which means that utilities could buy electricity at lower costs; And three periods in which generating the surplus is drawn up with market prices that are higher than PPA exercise prices.
There are signs that the Lucky Streak is over, and Gyenes told PV Magazine Early data suggesting that in the winter 2024 the seasonal hedge would not have been profitable for PPA-Offakers on solar energy in the long term. LCP Delta now recommends that British utility companies do not consider a seasonal win in the long term as a matter of course in the next round of PPA negotiations, set for Spring 2025.
The analyst has proposed negotiators to consider the seasonal baseload price as the starting point for negotiating a exercise price, currently in the reach of GBP 80-100/ MWh, to “keep risks and market stability into account”. This would fall a step compared to the average seasonal baseload price of GBP 118/MWh between 2019 and 2024.
Told Gyenes PV -Magazine That missing the goal on the exercise prices could have consequences for the implementation of solar energy.
“If you set the price too high, the offtakers will essentially lose money on it, which means that they will no longer be interested,” he said. “The solar generators should then try to sell on the day-light market or they should go to different fairs, which increases their risk.”
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