Statkraft signs ten-year PPA

As Scurf Dyke Solar Farm was project financed, it was important to have a long-term offtake contract in place so that there was a clear route to market for power and REGOs. Statkraft has worked with all of 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.

BayWa r.e. acted in an EPC role to develop and construct the project, whilst their Asset Operations division will assume responsibility for the operations and maintenance of the site on a long-term agreement. Statkraft and BayWa r.e. have previously agreed PPAs in the UK, on Dalquhandy Wind Farm, and in Spain, on both the Tordesillas and Don Rodrigo solar projects.

FP Lux and BayWa r.e. are also constructing an 8 MW BESS adjacent to the solar farm, which Statkraft will optimise. With the largest portfolios of both BESS optimisation and renewable PPAs in the UK, Statkraft is well placed to provide offtake solutions on both elements.

This is the latest PPA 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 is able to set a minimum strike price, which, if not achieved in the day-ahead power auction, would lead to the asset being down-regulated. This would mean Scurf Dyke Solar Farm can be turned off by Statkraft so that it avoids generating power during negative price periods.

Any projects from AR4 will not receive a top up under the revised CfD mechanism, for any output generated during a negative price period. However, Statkraft can manage this risk for generators via its well-established Virtual Power Plant (VPP) system. Statkraft’s VPP has been used effectively for a number of years to manage the renewables PPA portfolio in Germany and elsewhere in Europe, and to optimise the flexible generation portfolio here in the UK.

Statkraft’s UK Markets team has been a consistent part of the market for many years, having previously signed CfD PPAs for onshore and offshore wind projects from AR1 in 2015, and AR3 in 2019. Since onshore wind and solar were re-introduced to the CfD auction process, a large number of projects have been successful. Statkraft has been in contact with the majority of the successful parties to explain the different Route to Market services for power and Renewable Energy Guarantees of Origin (REGO) that it offers, as well as risk management and potential project optimisation.

“Following a competitive tendering process, Statkraft were selected as the offtaker for Scurf Dyke. Given the size of the project, the counterparties involved and the potential addition of a BESS, we were particularly excited to be involved. Because of the significant prior experience of the team, once selected we were able to progress the contracts smoothly and meet Scurf Dyke’s timescales,” said John Puddephatt, Statkraft’s PPA Origination Manager. “The signing of a PPA with a new customer is always a very positive moment, and I hope we’ll be able to build on this new relationship with re:cap and optimise its renewable assets in both the UK and more widely.”

“We were keen to work with an offtaker that could offer a renewables PPA as well as route to market optimisation services for BESS, and could meet our investors’ and funders’ requirements. Statkraft also offered competitive commercial terms, could demonstrate previous experience and could provide a PCG from their A rated parent company,” commented Thomas Seibel, CEO at re:cap Global Investors.

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