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Helping you make sense of the energy and water sectors

Publications

Chart of the Week

2019

Risky business: forecasting revenues for green power

Our recently published Green Power Forecast provides a five-year outlook of revenue streams available to green generators. We forecast prices for wind, solar and baseload projects, providing a theoretical maximised revenue stack for comparison against PPA offers. Our Chart of the Week shows an annual forecast of revenues for onshore wind projects with high voltage connections to the distribution network, using a national average figure for embedded benefits. Values are given for export-only revenue; however, most sites will also be in receipt of subsidy payments from either the Feed-in Tariff or Renewables Obligation schemes.   Power prices - backwardation & cannibalisation The revenue from wholesale power declines over time due to backwardation in the market, meaning future power contracts are priced lower than those closer to delivery. This trend causes a decrease in revenue of ~£5/MWh over the forecast period. Wind assets are also impacted by price cannibalisation. This is the depressive influence on the wholesale electricity price at times of high output from intermittent, weather-driven generation such as solar, onshore and offshore wind, and this trend is set to rise. Embedded benefits – uncertainty remains In this edition of the Green Power Forecast, we analysed the potential impact of proposed changes to the Balancing Use of System Charge (BSUoS) embedded benefit. Ofgem’s most recent minded-to position would see BSUoS swing from an embedded benefit to become a charge from April 2021. In total, embedded benefit values fall by £6.46/MWh (59%) between 2020-21 and 2021-22 in our forecast, ...

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