Posted on: 11/10/2016
Following the release of our latest report on the independent generation sector, Iain Robertson, Generation Sales Manager, discusses the commercial trends we see emerging.
After several years of sustained growth and significant investment, the independent generation sector now finds itself facing a period of unprecedented challenges.
A combination of sudden subsidy changes, difficult market conditions and fresh political uncertainty in the wake of the EU referendum has shaken confidence and undermined the economic case for many projects.
Against this backdrop, developers and investors are actively looking to find smarter ways to ensure their current and future projects can meet their aspirations.
We recently commissioned a research project to gauge the state of the market and find out how generators are looking to operate in this new landscape. The results are published in our Meeting the Changing Needs of Independent Generators report - download here.
Our research found there is a growing shift away from ‘off-the-shelf’ Power Purchase Agreements (PPAs) towards tailored and flexible agreements which offer much greater control over price and risk.
The commercial structures offered by providers need to recognise the fact that generators are looking for long term contracts but with more freedom on price options within them. Whether their prices are fixed or indexed under agreements is less important than the end result.
There are several clear trends for how generators are choosing to sell their power, including:
- Framework products to give more control over energy price
- Flexible price management to maximise market opportunity
- Full energy market access through a trading partner function
- Empowering a partner to deliver against an agreed strategy
Many generators are also interested in the new opportunities presented by battery storage and ancillary services. They want solutions to help them take advantage of opportunities to extract value from a combination of revenue streams.
We are always open to hearing from more generators about the solutions they require and how we can help them. Based on feedback from the industry, we will direct our priorities to develop our products to support these innovative requirements and hopefully play our part in the future success of the industry.