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UK Renewable PPAs continue to grow in 2021

Power purchase agreements for renewable energies are increasingly popular in the UK thanks to its contracts for difference scheme and an increased sustainability push among businesses, reports energy consultancy Cornwall Insight.

By Energy Monitor Staff

Renewable power purchase agreements (PPAs) in the UK have increased by 1.2 gigawatts (GW) since September 2020, reaching a total of 30.7GW, says a report from energy consultancy Cornwall Insights.

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Wind Power Market seeing increased risk and disruption

The wind power market has grown at a CAGR of 14% between 2010 and 2021 to reach 830 GW by end of 2021. This has largely been possible due to favourable government policies that have provided incentives to the sector. This has led to an increase in the share of wind in the capacity mix, going from a miniscule 4% in 2010 to 10% in 2021. This is further set to rise to 15% by 2030. However, the recent commodity price increase has hit the sector hard, increasing risks for wind turbine manufacturers and project developers, and the Russia-Ukraine crisis has caused further price increase and supply chain disruption. In light of this, GlobalData has identified which countries are expected to add the majority of wind power capacity out to 2030. Get ahead and download this whitepaper for more details on the current state of the Wind Power Market.
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Wind power is one of the more popular technologies for renewable PPAs. Photo by 4H4 Photography via Shutterstock.

The report attributes most of this new capacity to the UK’s contracts for difference (CfD) scheme, which is the UK Government’s main mechanism for supporting new low-carbon electricity generation. This pays renewables developers the difference between the cost of the low-carbon power they produce and the electricity market price.

As of March 2021, Cornwall Insights identified 905 megawatts [out of 1.1GW] of CfD planned capacity linked to a PPA, with a further 3.7GW of signed capacity not yet operational.

As government subsidies are scaled back, a corporate PPA can provide revenue certainty for project developers looking to raise finance for a new project. In turn, PPAs can bolster a corporate’s green credentials.

Most of the PPAs are being signed with new-build subsidy-free projects, the report says. Solar PV and wind were the preferred technologies, and the most common deal lengths were 10 and 15 years.

However, finalising a PPA continues to be a lengthy and difficult process. For short-term PPAs (around three years), risks arising from price cannibalisation – the depressive influence on wholesale electricity prices at times of high output from intermittent, weather-driven generation – remain a significant barrier.

Free Report
img

Wind Power Market seeing increased risk and disruption

The wind power market has grown at a CAGR of 14% between 2010 and 2021 to reach 830 GW by end of 2021. This has largely been possible due to favourable government policies that have provided incentives to the sector. This has led to an increase in the share of wind in the capacity mix, going from a miniscule 4% in 2010 to 10% in 2021. This is further set to rise to 15% by 2030. However, the recent commodity price increase has hit the sector hard, increasing risks for wind turbine manufacturers and project developers, and the Russia-Ukraine crisis has caused further price increase and supply chain disruption. In light of this, GlobalData has identified which countries are expected to add the majority of wind power capacity out to 2030. Get ahead and download this whitepaper for more details on the current state of the Wind Power Market.
by GlobalData
Enter your details here to receive your free Report.

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