‘Milestone’ solar-plus-storage offtake agreement in the UK

PPA and optimisation agreement ‘provides model for market and unlocks pent-up demand’ for solar-plus-storage

The first bankable and unsubsidised co-located PPA and optimisation agreement in the UK has been announced by Dutch equity fund DIF.

The hybrid PPA covers a 55MW solar farm with a 40MW/80MWh battery storage system in Leighton Buzzard, England, providing energy over a 10-year term. 

The market-first hybrid PPA is also intended to provide secure and bankable revenue streams for both the solar farm and storage system.

This new agreement comes on the back of massive growth in interest in the co-location of solar-plus-storage projects in the UK, as solar investors turn to batteries to maximise the value and flexibility of their assets in the post-subsidy market.

Some 45% of all solar planning permissions submitted in the UK in the past two years have been for hybrid systems encompassing storage.

The deal was supported by Swiss software and advisory business Pexapark, which said the hybrid trend is reflected in the wider European market.

Appetite for storage

It said its own data reveals that some 64% of renewable energy businesses are now seeking to introduce or increase the proportion of storage in their portfolios.

Over the past decade, PPAs have provided an important revenue stream and hedging mechanism for renewable energy developers and offtakers looking to trade in Europe’s post-subsidy markets.

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However, PPAs for co-located projects have remained difficult to agree on because of their complex operational usage profiles and contracting structures. This has limited the options available for financing solar hybrid pipelines.

By providing secure and bankable revenue streams, Pexapark highlights that the DIF hybrid PPA provides a model for the wider market to follow in order to reach scale amid the broader energy transition across the UK and the EU.

Deep quantum analytics

In particular, Pexapark points to the critical importance of combining high-level negotiating expertise and deep ‘quant’ analytics to structure and close future deals of this complexity.

Brian Knowles, Pexapark’s director of Storage & Flexibility, said the PPA “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.”

Jack Rankin, PPA Transaction Advisory Regional Lead for GB & Ireland, added: “We anticipate that this deal will be the first of many, representing a turning point for the European sector in the deployment of bankable solar hybrid projects.

“In the long run, agreements like this will be essential for integrating high shares of intermittent renewable energy generation into the grid."