We have launched a PPA market share report for the renewables sector.
The bi-annual report, aimed specifically at offtakers and suppliers active in the renewables sector, will provide an in-depth view of rankings, business strategies and market trends.
The last 12 months have been a period of rapid change and upheaval for the renewables sector. The government's recognition of the potential for an overspend on the the Levy Control Framework (LCF) budget--a possibility that we had been forecasting for well over a year--led to proposals for a number of cost control measures aimed at renewables support schemes. These proposals were more severe and wide reaching than many in the market suspected: closure orders for solar and wind under the RO, a complete overhaul of the FiT scheme, the removal of Levy Exemption Certificates, and plans to focus CfD spending away from more established technologies have all combined to create a very different renewables sector than many foresaw.
Through our work with stakeholders in the sector, including our 25 member strong Green Generators Group (3G), we have been able to get a view on the impacts in the market and investor sentiment. Our Green Power Forecast, launched in 2014, surveys over 10 offtakers and generators each quarter, providing information on investor sentiment, PPA pricing and market strategies in the renewables sector. The survey helps us produce our PPA pricing discounts and competition assessments as part of the report. Through the market surveys, a key trend expressed over the last 6 months has been the focus by both generators and offtakers on the current RO and FiT markets, as projects continue to rush to market ahead of closure orders and uncertainty remains over CfD auctions.
Over the last year over 3.3GW and 1.0GW has been accredited under the RO and FiT schemes and a rush of accreditations is expected over the coming months with recent policy changes. Our research showing a highly competitive and liquid short-term PPA market led us to ask the question: "Which offtakers are benefitting from this accreditation rush and how do they rank in the renewables market?"
Addressing this question is among the aims of our new PPA market share study. Splitting the market into equity/owned assets and those looking for a PPA, the report segments the market into four capacity size categories (above 10MW, 500kW to 10MW, 30kW to 500kW and below 30kW) detailing market share rankings, the business strategies employed and gains and losses for specific offtakers. Research is undertaken through public databases and our industry knowledge, with results verified, like our retail market share reports, by the specific offtakers themselves.
After a successful pilot study in July 2015, when 11 prominent offtakers accounting for ~70% of capacity provided us with feedback, we officially launched our first survey in December 2015. Findings showed that:
- overall renewables (RO and FiT) capacity was 24.3GW, with the PPA market accounting for 58% of this at 14.1GW, an 800MW rise on the 13.3GW of PPA capacity in the pilot study;
- there are 26 active offtakers in the market and 15 of these have a market share of over 1% - up from 13 in the pilot study;
- clear market strategies can been seen through capacity data, with some offtakers only active in the above 10MW and 500kW to 10MW market segments where long-term PPAs are more prominent and credit and bankability become a factor in deciding provider. In contrast, a number of specialist offtakers were gaining significant capacity in the 30kW to 500kW market. These offtakers focussed on picking up the higher number of FiT sites rushing to market through short-term PPAs and also through sites up for re-tendering;
- increasing competition in the renewables PPA market - something we have been reporting for some time in our Green Power Forecast - was seen by the number of offtakers who had capacity in certain market segments. 22 of the 26 known offtakers in the market had capacity in the 30kW to 500kW market reflecting the intense competition for projects; and
- compared to the pilot study, large changes could be seen in specific offtaker capacity, with some offtakers gaining over 200MW over the six months to December and other prominent offtakers losing up to 180MW.
Our next aims are to expand the service closer to 100% offtaker coverage, broaden research into output (MWh) as well as capacity market share and provide a detailed view of project owner market share.