Pexapark supports first Solar-plus-Storage offtake agreement in the UK

Confidence in the UK’s solar + storage market has been given a significant boost by the country’s first bankable and unsubsidised co-located Power Purchase Agreement and optimisation agreement (hybrid PPA), announced this week by equity fund DIF.
Pexapark supports first Solar-plus-Storage offtake agreement in the UK
Courtesy of Sungrow EMEA/Unsplash.

The milestone hybrid PPA – supported by software and advisory business, Pexapark - covers a 55 MW solar farm with a 40 MW/80 MWh battery storage system in Leighton Buzzard, providing clean energy and secured revenue across the solar and battery energy storage system (BESS) over a 10 year term.  The market-first hybrid PPA will also provide secure and bankable revenue streams for both the solar farm and storage system.

This new agreement comes off the back of massive growth in interest in the co-location of solar + storage projects in the UK, as solar investors turn to batteries to maximise the value and flexibility of their assets in the post-subsidy market. 45 percent of all solar planning permissions submitted in the UK in the past two years have been for hybrid systems encompassing storage. 

This trend is reflected in the wider European market, where, according to Pexapark’s recent survey data, 64 percent of renewable energy businesses are now seeking to introduce or increase the proportion of energy storage in their portfolios.

Over the past decade, PPAs have provided an important revenue stream and hedging mechanism for renewable energy developers and offtakers looking to trade in Europe’s post-subsidy markets. However, PPAs for co-located projects have remained difficult to agree on because of their complex operational usage profiles and contracting structures. This has limited the options available for financing solar hybrid pipelines.

By providing secure and bankable revenue streams, Pexapark highlights that the DIF hybrid PPA provides a model for the wider market to follow in order to reach scale amid the broader energy transition across GB and the EU.

In particular, Pexapark has pointed to the critical importance of combining high-level negotiating expertise and deep ‘quant’ analytics to structure and close future deals of this complexity. Working with DIF, the seller within the agreement, Pexapark’s PPA Transaction advisory team was able to draw on the quantitative expertise of its Storage and Flexibility Desk to analyse expected revenues and risk exposure. This enabled Pexapark to determine an optimal PPA structure that encompasses both the power generation and storage aspects of the project.

“We’d like to congratulate DIF on this pioneering PPA, which marks the first of its kind in the UK and Europe more widely” said Brian Knowles, Director of Storage & Flexibility, Pexapark. “The innovative nature of this agreement reflects our commitment to finding new PPA solutions for unsubsidised renewable energy developers and offtakers, with contracted revenues that offer attractive returns and low risk profiles for investors.”

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