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Market research & Insight

Q418 Forecast

Tim Dixon Tim Dixon Team Lead

The Market Benchmark Price and therefore PPA values for Roc, FiT and subsidy free projects has fallen since our last report, owing to a fall in wholesale power prices. Wholesale power prices in Q418 have retreated from the market highs recorded at the end of Q318 and start of Q418. Seasonal contracts from summer 19 to summer 23 fell by 6% on average, driven by falling gas prices and the impact of the mild winter to date, helping maintain a healthy gas supply position. Falling wholesale prices were also linked to falling prices in the commodity markets, with oil and coal prices down substantially on last quarter. In contrast, EU ETS carbon prices continued to rise, with pressure coming from the start of the new Market Stability Reserve. There has been a slight rise in our forecast Roc value for CP18 (2019-20) compared to our previous report. Our forecast of Roc values for all other years (CP19 – CP22) is little changed on our last report, down £0.01/Roc on average. We also include details of CP16 and CP17 Roc values, including the impacts of mutualisation on recycle values, which will act to delay payments made to generators for both years. In our embedded benefits section, we explore recent updates regarding Ofgem’s Target Charging Review, which includes proposals to remove the BSUoS embedded benefit, and the more recent Forward Looking Charges and Network Access arrangements. There are more than 40 offtakers in the renewables PPA market, where the short-term PPA market remains ...

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