Investor DIF and renewable energy optimiser Pexapark have announced what they claim is the UK’s ‘first bankable and unsubsidised co-located PPA’, for a solar and storage project.
The hybrid power purchase agreement (PPA) supported by Pexapark covers a 55MW solar farm with 40MW/80MWh of battery energy storage capacity co-located. This site will be located in Leighton Buzzard, Bedfordshire, and will cover a 10-year term.
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In a statement made by the business, it confirmed that “the market-first hybrid PPA will also provide secure and bankable revenue streams for both the solar farm and storage system”.
This agreement also represents a key aspect of the market within the UK. In order to optimise and increase revenue output of many solar farms, companies are looking to co-location of energy storage. This also helps to boost the flexibility of their assets in the post-subsidy market.
Showcasing this rising popularity, Pexapark highlighted that “45% of all solar planning permissions submitted in the UK in the past two years have been for hybrid systems encompassing storage”.
By providing secure and bankable revenue streams, the DIF hybrid PPA provides a model for the wider market to follow in order to reach scale amid the broader energy transition across GB and the EU, a statement read.
Brian Knowles, director of storage and flexibility at Pexapark, said: “We’d like to congratulate DIF on this pioneering PPA, which marks the first of its kind in the UK and Europe more widely.
“The innovative nature of this agreement reflects our commitment to finding new PPA solutions for unsubsidised renewable energy developers and offtakers, with contracted revenues that offer attractive returns and low risk profiles for investors.”
Challenges as well as opportunities to co-location
Co-locating renewable generation with energy storage presents opportunities but also challenges, particularly around offtake agreements, according to a developer speaking anonymously at-length on the topic to Energy-Storage.news last year, discussing the UK market.
Alongside potential issues around grid connection and structuring the project’s special purpose vehicles (SPVs), optimising the offtake of a hybrid project is complicated, they said. In the case of a shared grid connection, it can mean the traditional utility world of long-term PPAs for renewables rubbing up against the algorithm-based new wave of BESS optimisers.
Our source described the combination of both sides – which seems to be being offered here by Pexapark – as “somewhat rare in the UK market” and that another option would be to have two parties responsible for each portion of the project.