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Chart of the Week

2020

Flexible asset PPA market—growing, evolving & competitive

Tim Dixon Team Lead

We’ve just completed the latest research for our Flexible Asset PPA Market report. In this report we analyse and forecast key aspects of this market to detail how Power Purchase Agreements (PPAs) are being used to support flexibile assets. Here, we look at some of the key headlines from the report. What do we mean by the PPA market for flexible assets? We mean the agreements between flexible generators and offtakers (& optimisers) to trade and optimise the assets across available revenue streams, such as wholesale and balancing markets. And by flexible assets, we broadly refer to front-of-the-meter gas and diesel engines, battery storage, OCGTs and CHPs. Our latest report in this growing market, published earlier this October, details the size of the flexibility market (including capacity under third party PPAs), all active offtakers and optimisers, PPA types and pricing levels, and wider market trends. Using analysis from all Capacity Market registers to date, our latest report shows there is currently ~10.8GW of operational flexible capacity from the above technologies. It is important to note that not all this will be under third party PPAs/ optimisation deals, with many developers able to self-trade assets. Nonetheless, reported capacity levels under PPAs have increased as new sites continue to commission—our survey and analysis of the market shows that well in excess of 4GW is under some form of third party PPA, with future growth set to be dominated by new battery storage and gas assets. Our research ...

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