Route-to-market Power Purchase Agreements (PPAs) have emerged as a compelling financing model for renewables due to the lower availability of subsidies, lowered flexibility of the dominant subsidy scheme, and Contracts-for-Difference. As the energy transition brings unique challenges, PPAs offer a level of certainty that helps to manage these challenges more effectively and mitigate risk.
In Europe, Great Britain is one of three mature markets for PPAs, second only to Spain in terms of capacity contracted. According to our forecast, the GB PPA market is expected to be undersupplied in 2030, with the demand rising to 101 TWh as offtakers seek to decarbonise, with supply only rising to 63 TWh because of logistical constraints. As demand outstrips supply, PPAs offer attractive returns due to the low cost of capital, and solar PV assets command a premium to capture prices, making the GB PPA market lucrative for developers, financiers, and offtakers.
To provide a detailed understanding of the role of PPAs in the GB power market, we have published a comprehensive report, covering:
- An overview of the PPA market
- Introduction to Aurora’s methodology for pricing PPAs
- Valuation of PPAs in Aurora’s Central scenario
- Considerations for PPAs
Click the link below to access a redacted version of the report, and we will follow up with you about the full report: