It’s the question on everyone’s lips at the moment (everyone in solar circles, anyway) – are we finally reaching the point where solar can be developed to be competitive with the grid, providing an unsubsidised renewable power supply for corporate customers? Can additional renewables compete with the secondary market of subsidised assets?
Well, it might be an overly wordy question, but the answer is still a very pertinent one for anyone with an interest in the UK solar market – and we think we are nearly there. Finally, we’re approaching a time where grid-connected, or “sleeved” solar PPAs could begin to offer good value to corporates looking to secure a long term supply of renewables at a stable price.
After a tumultuous couple of years, we’re on the verge of a breakthrough. The popularity of corporate PPAs remains big news in the energy sector, with Microsoft securing 500MW of clean energy in the United States alone. Also taking advantage of the availability of secure, renewable electricity are global giants such as Google and Apple and aluminium-manufacturer Norsk Hydro, which have entered into a 19-year agreement to buy 1.65TWh of green electricity annually.
Sleeved PPAs might well be a ‘Brave New Hope’ for solar, negating some of the major barriers between prospective solar consumers and green energy.
Where private wire PPAs are well suited to businesses with a single centre of operations with a large energy demand, outside or on the margins of an urban area, a sleeved PPA is an excellent solution for a business with a high energy demand, spread across many sites. This energy profile makes it easy to build bigger project, which in turn often means offering lower prices.
Under the right circumstances, sleeved PPAs could be about to breathe new life into the UK solar industry and offer corporates committed to buying renewables a competitive PPA opportunity with the benefits of price stability and carbon reduction without the project being subsidised through a cost that is passed on to the rest of the market.
So what would those circumstances be? Nothing particularly unobtainable – the ideal project would need to tick these three boxes:
- Scale and location: an ideal project would be simple in configuration, easy to delivery, in an accessible and suitable location with a good level of irradiation
- Corporate partnership: for a successful sleeved PPA, you need a competitive structure with a strong corporate off-taker
- Developer partnership: potentially most important is an experienced development partner, with scalable operational capabilities, and access to low cost funding
At Lightsource, we have a project designed to successfully meet all these criteria, and we’re looking forward to moving into the development stages, with the support of a corporate PPA customer.
Nick Boyle is the CEO of Lightsource.
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