In fact, Cornwall Insight assessed a total of 30,710MW of renewable PPA capacity, a 1,190 MW increase from the previous report, which assessed capacity as of September 2020.
Below is a graph that highlights the publicly announced capacity since August 2019. It also shows that the majority of this new capacity came from projects commissioning under the Contracts for Difference (CfD) scheme. As of March 2021, Cornwall Insight identified 905 MW of active CfD capacity signed to a PPA, with a further 3.7 GW of capacity signed to PPAs but not yet operational.
Lee Drummee, Analyst at Cornwall Insight, 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. In addition, since the Renewables Obligation and Feed-in Tariff schemes closed to new capacity there has been a gap in the market for generators outside of the CfD, with CPPAs becoming increasingly crucial for generators looking to secure revenues for projects. Similarly, CPPAs have become an effective way for businesses to prove their green credentials.
New-build subsidy-free solar and wind projects
“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.
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“The length of CPPAs analysed in the report varies considerably, ranging between 4 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.
“While subsidy-free PPAs have been more common with corporate buyers, subsidy-free deals between utilities and generators have gained traction. Since we actively began to track these deals in August 2019, we have identified PPAs for 3.8 GW of new build capacity. Whilst the vast majority (2.5 GW) is with CfD assets“.
Great importance of Corporate Power Purchase Agreements
Large portions are also made up of subsidy-free CPPAs (890 MW) and subsidy-free utility PPAs (420 MW). Over the same timeframe, approximately 2.1 GW of existing assets signed new PPA deals, with 1.9 GW being signed with a utility offtaker and just 120 MW purchased by a corporate buyer.
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“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.” (hcn)
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