Statkraft has entered into a ten-year power purchase agreement (PPA) and optimization agreement with international investor FP Lux Group, advised by re:cap global investors ag.
The agreement encompasses the Scurf Dyke Solar Farm and battery project near Driffield, East Riding of Yorkshire, which is one of the largest solar installations in the UK with an installed capacity of 80.6 MW.
Project Finance and Route to Market:
Due to the project-financed nature of Scurf Dyke Solar Farm, a long-term offtake contract was essential to establish a clear route to market for both power and REGOs (Renewable Energy Guarantees of Origin).
Statkraft’s extensive experience with UK project finance lenders ensured smooth documentation and processes, familiar to banks, investors, and advisors. Statkraft AS, with its strong credit rating (S&P A rated), also provided a Parent Company Guarantee, reinforcing the project’s financial stability.
Collaboration with BayWa r.e.:
BayWa r.e. served as the EPC (Engineering, Procurement, and Construction) contractor, responsible for developing and constructing the project. Their Asset Operations division will oversee the long-term operations and maintenance of the site.
This collaboration builds upon previous successful partnerships between Statkraft and BayWa r.e. on renewable energy projects in the UK and Spain.
Battery Energy Storage System (BESS) Optimization:
FP Lux and BayWa r.e. are also constructing an 8 MW Battery Energy Storage System (BESS) adjacent to the solar farm.
Statkraft, with its expertise in BESS optimization and renewable PPAs, will manage and optimize the battery system, ensuring efficient integration with the solar farm’s power output.
Mitigating Negative Pricing Risk:
This PPA is the latest in a series of agreements Statkraft has signed for projects that have received a Contract for Difference (CfD) from Allocation Round 4 (AR4). As with other PPAs in Statkraft’s UK portfolio, the generator can set a minimum strike price.
If this price is not met in the day-ahead power auction, Statkraft can down-regulate or turn off the solar farm to avoid generating power during periods of negative pricing, mitigating financial risk for the generator.
Virtual Power Plant (VPP) System:
Statkraft’s established Virtual Power Plant (VPP) system plays a key role in managing this risk for generators.
This system has been successfully employed in Germany and other European markets to optimize renewable PPA portfolios and flexible generation assets.
Extensive Experience in UK Market:
Statkraft’s UK Markets team has a long-standing presence in the market, with a history of signing CfD PPAs for onshore and offshore wind projects since 2015.
With the reintroduction of onshore wind and solar to the CfD auction process, Statkraft has actively engaged with successful bidders, offering various Route to Market services for power and REGOs, as well as risk management and project optimization solutions.
New Partnership and Future Prospects:
The signing of the PPA with re:cap marks a new customer relationship for Statkraft and opens doors for future collaboration on renewable asset optimization in the UK and beyond.
This partnership highlights Statkraft’s commitment to providing comprehensive energy solutions and contributing to the growth of renewable energy in the UK market.