Statkraft, Europe’s largest renewable power generator, and a leading provider of market access and optimisation services has signed a Power Purchase Agreement (PPA) with Brockwell Energy and Encyclis. The PPA for Earls Gate Energy Centre (EGEC), located in Grangemouth, Falkirk, is the first to be signed by Statkraft for an Energy from Waste (EfW) project where there is onsite demand.
The PPA procurement process for EGEC was led by Brockwell Energy Services and they selected Statkraft as part of their ongoing Managed Service Agreement for EGEC. The project has a total installed capacity of 23MW but as there will be onsite demand for power and steam, the expected export capacity will typically be around 12.5MW. The project was designed specifically to meet the current and forecast steam and power demands of the adjacent industrial off-takers.
Earls Gate Energy Centre is located in Grangemouth, Falkirk
As Earls Gate Energy Centre was project financed, it was important to have an offtake contract in place so that there was a clear route to market for Renewable Energy Guarantees of Origin (REGOs) and for power, including additional power to be exported during any periods where onsite demand is reduced.
Statkraft has worked with all the lenders active in the UK project finance sector, therefore the documentation and processes are familiar to banks, investors, and advisors. Statkraft AS (S&P A rated) provided a Parent Company Guarantee, as requested, as it has many times since it signed its first UK renewables PPA in 2010.
Brockwell led the development and construction of the project, whilst their asset management team will continue to assume responsibility for the operation and maintenance of the site. As part of their comprehensive tender process, Brockwell had specific requirements regarding the ability to fix and unfix power prices and to be able to forward fix prices multiple seasons ahead. The PPA also required flexibility to allow volumes to be increased in the event that onsite demand was lowered and to be reduced in the event that onsite demand expanded as more onsite parties were supplied.
Any unhedged volumes are to be settled based on the N2EX Day Ahead Hourly reference prices as is common within the industry.
Statkraft’s UK Markets team has been a consistent part of the market for many years, having signed its first UK PPA in 2010. The Statkraft PPA portfolio mostly consists of intermittent generation but also includes several long-term baseload PPAs for biomass and EfW.
John Puddephatt, Statkraft’s PPA Origination Manager, said: 'Following a competitive tendering process, Statkraft were selected as the offtaker for Earls Gate Energy Centre. Given the scale of the project, specific requirements regarding fixing and unfixing power prices, the counterparties involved, and that the development was funded by a portfolio of lenders with very specific requirements, we were very pleased to be involved.
'The signing of a PPA with a new customer and for a project where the generator’s requirements are quite different from those of an intermittent renewables generator is a very positive step for Statkraft and an example of our continuing innovation and adaptability, in order to meet the needs of our customers, and I hope we’ll be able to build on this and developer a wider portfolio of Energy from Waste PPAs'
David Surtees, Brockwell’s Commercial Manager, said: 'We defined a stringent and challenging set of requirements for the PPA, catering for the complexity of providing electricity and steam through a private wire and exporting power to the Grid. The PPA needed to be flexible to allow the plant to fix and unfix market positions to ensure maximum value from power offtake whilst also meeting our investor and lender requirements.
'After an extensive competitive tender process we selected Statkraft, feeling they are best placed to work proactively with the Brockwell Asset Management team to ensure value optimisation for the EGEC plant'
Source: Statkraft
