Senvion signed an historic contract with German developer EnergieKontor to supply turbines to the UK’s first subsidy free wind farm, Withernwick II. Based in East Riding in Yorkshire in the North East of England, the wind farm will consists of four MM92 turbines and extends the original 18.45 MW Withernwick Wind Farm constructed back in 2016, by a further 8.2 MW.
The Business Case for Direct Power Purchase Agreements
Following the UK Government’s decision to exclude the onshore industry from bidding for Contracts for Difference (CfD) auctions, currently worth over £557m, developers have had to rely on targeting sites windy enough to work on wholesale prices alone. The other route is through Power Purchase Agreements (PPA), a contract to purchase energy between a renewable energy developer and a creditworthy buyer. First adopted by commercial, industrial and institutional (C&I) buyers in 2008, PPAs have shown a dramatic increase in market share in the last five years, adding a cumulative total of more than 8,000 MW of new wind and solar to the global grid.
Withernwick II has been fully funded solely with revenues from a Power Purchase Agreement (PPA) with one of the UK’s leading consumer goods brands. The company will be supplied with renewable energy from the site at a long term fixed price. David Hardy, Senvion’s Chief Sales Officer and Executive Director explains: "This is our sixth contract with EnergieKontor and Withernwick II is proof that with the right developer, turbine technology and associated partners, a profitable subsidy free wind farms can be successfully realised. We are delighted to be supplying turbines to what we believe is the UK’s first subsidy free wind farm." Construction at Withernwick II is due to start shortly and the site will be commissioned in early 2019.
This is our sixth contract with EnergieKontor and Withernwick II is proof that with the right developer, turbine technology and associated partners, a profitable subsidy free wind farms can be successfully realised.
Peter Szabo, Chief Executive Officer of Energiekontor AG, adds: "The financial close of the Withernwick II project, the UK’s first profitable wind farm under pure market conditions, shows that our strategy to reduce costs by improving efficiency is bearing fruit. It also underlines our pioneering role in the quest to realise wind farms and solar parks with a lower levelised cost of electricity than fossil and nuclear alternatives. It is our most important contribution to our vision of a society whose electricity needs are fully covered by renewable energy."
PPAs allow buyers to enter into delivery contracts directly with renewable project developers, securing a long-term and predictable source of energy over the life of the PPA (10-20 years). By hedging against the rising costs of conventional energy, companies are able to considerably reduce their energy costs while stimulating the growth of clean technologies and meeting sustainability commitments. Although in their infancy in the UK, through 2018 we expect to see more PPAs signed between energy producers and big business, as the demand for cheaper energy meets the onshore industry's need to develop new sites and offload their energy.