How EDF Energy’s Power Purchase Agreement meets three key criteria for the fast growing renewable energy investor
Low Carbon invests in new renewable energy projects, including utility-scale solar farms, in the UK. To date it has enabled the deployment of approximately £200 million to renewable energy investments to further the development of more than 200MW of renewable capacity. Low Carbon’s portfolio of renewable energy projects is growing rapidly. In 2013 Low Carbon began collaborating with Macquarie Capital to deliver a portfolio of up to 300MW of solar parks in the UK. Under the collaboration agreement, Macquarie will provide the funding required to construct a portfolio of solar projects in the UK that could power up to 100,000 homes per year. This growth led Low Carbon to review the Power Purchase Agreements (PPA) through which they sold their electricity output and renewable energy certificates. For a renewable developer, a PPA is the tool that makes everything else possible as it secures the revenue streams that pay for the development of a site into a generation asset. During the first quarter of 2014, Low Carbon commissioned five solar park developments backed by a PPA signed with EDF Energy at the end of 2013. Low Carbon selected EDF Energy as their offtaker because the electricity company was able to provide a PPA that meets three key criteria for the fast growing renewable energy investor.
1. Competitive pricing. EDF Energy’s PPA provides Low Carbon with competitive and clear pricing that separates the different components and allows the energy price achieved to be benchmarked against public third party sources. This gives Low Carbon the security that the price it achieves for its power output is fair and market reflective
2. Accelerate new developments. The PPA contract is structured to enable Low Carbon to add new developments in a highly repeatable manner. This arrangement reduces Low Carbon’s lead times and project risk as it brings new developments to the point it can commission construction. Developing new renewable energy projects is a lengthy complicated process involving land owners, planning authorities, electricity network operators, funders and technical assessments. Typically all contracts – for land tenancy, grid connection and funding – need to be in place on the same day or the project risks unravelling before construction is due to start. Having a good PPA and sound offtaker in place ticks off a key feasibility phase task for Low Carbon. Confidence that EDF Energy can mobilise the PPA quickly on the day of completion allows time for all the other contracts to be signed within a day as those parties can see the means to future revenues are in place. This reduces a principal risk at the point of financial closure of the project.
3. Stability. The structure of the PPA – with competitive, clear pricing and a single purchaser of all products – backed by a large, stable, creditworthy PPA provider in EDF Energy, enables Low Carbon to continue catalysing investment in new renewable projects.
Low Carbon now has five of its newest developments with a capacity of 60MW active on its PPA structure with EDF Energy.
Notes To Editors
ABOUT LOW CARBON LIMITED
Low Carbon is a privately-owned UK investment company specialising in renewable energy. By investing in, owning and operating renewable energy projects, we are committed to making a positive and significant impact on the causes of climate change. Managing assets on balance sheet for listed and unlisted third parties, we facilitate investment in solar photovoltaic (PV), concentrated solar power, wind and anaerobic digestion technologies. Our dedicated team has an excellent track record in solar assets, over 200MW of which we have funded and built and/or operated – a total we expect to increase as needs for renewable energy grow and opportunities for our investor partners gather pace. In the first quarter of 2014, Low Carbon commissioned five new solar parks with a maximum generating capacity of 60MW – sufficient renewable energy to power approximately 17,500 3-bedroom homes per annum (based on Ofgem estimates). The five sites with EDF Energy as the PPA provider are located in Pembrokeshire, Cornwall, Wiltshire and Suffolk.
EDF Energy is one of the UK’s largest energy companies and the largest producer of low-carbon electricity, producing around one-fifth of the nation’s electricity from its nuclear power stations, wind farms, coal and gas power stations and combined heat and power plants. The company supplies gas and electricity to 5.8 million business and residential customer accounts and is the biggest supplier of electricity by volume in Great Britain. EDF Energy’s safe and secure operation of its eight existing nuclear power stations at sites across the country makes it the UK’s largest generator of low carbon electricity. EDF Energy is also leading the UK’s nuclear renaissance and has published plans to build four new nuclear plants, subject to the right investment framework. These new plants could generate enough low carbon electricity for about 40% of Britain’s homes. They would make an important contribution to the UK’s future needs for clean, secure and affordable energy. The project is already creating business and job opportunities for British companies and workers.
Through Our Sustainability Commitments, EDF Energy has developed one of the biggest environmental and social programmes of any British energy company. In 2013 EDF Energy received seven “Big Ticks” in the Business in the Community (BITC) Responsible Business Awards, including a Platinum Big Tick in BITC’s Corporate Responsibility Index. EDF Energy also received the Environmental Leadership for Behavioural Change Award in the national 2013 Environment and Energy Awards and was highly commended in the first ever pan European Corporate Social Responsibility Awards scheme for its Sustainable Schools programme – the Pod.
EDF was an official partner and the official electricity supplier to the London 2012 Olympic and Paralympic Games. The company supplied electricity to the Olympic Park which was backed by low-carbon sources: 80% from nuclear and 20% from renewable generation.
EDF Energy is part of EDF Group, one of Europe’s largest power companies. The company employs around 15,000 people at locations across the UK.