UK: Shell signs 5 year private PPA with BSR for 69.8 MW solar project – comment

The two companies announced today that Shell would become the sole off-taker of energy from the 69.8 MW Bradenstoke solar PV power plant – England’s largest and the U.K.’s second largest – under a five year PPA.

Neither Shell nor BSR would comment on the rate of the PPA. However, Graham Harding, MD and CFO of BSR did tell pv magazine that the plant, which was the first to be developed with the British Ministry of Defense, and was commissioned on March 31, 2015, receives a subsidy in the form of 1.4 Renewable Obligations Certificates (ROCs) per MWh.

Prashant Khorana, a renewable energy consultant at Consultmake said that for commerical and industrial customers, power prices are high, while there are lower incentives available, meaning if you can get a customer to pay around £100/MWh, this is an attractive deal.

Bloomberg New Energy Finance's Lara Hayim added, “Long gone are the days where subsidized U.K. plants could sign 15-20 year PPA deals. A 5 year contract will not be enough to incentivize British Solar Renewables to provide very competitive prices and the PPA is unlikely to have been signed below 70 pounds/MWh.”

Overall, the Bradenstoke plant, owned by Siem Europe SARL and asset managed and operated by BSR, is comprised of 269,000 solar PV modules and has a 50 MW AC export capacity. It generates around 65 GWh of energy annually.

Commenting on the news, Shell spokesperson, Sally Donaldson told pv magazine that the deal fits firmly into Shell’s New Energy Business strategy, unveiled in June 2016, of focusing on power – trading marketing and customer access and low-carbon generation and storage (solar, wind, gas) – and new fuels – biofuels and hydrogen.

In a strategy update last November, the oil and gas giant announced it would up the capital allocated to this business to $1 billion to $2 billion per year until 2020.

Of late, Shell has been upping its solar ante, having announced in January, the purchase of a 44% stake in U.S.-based Silicon Ranch. The transaction is expected to close in Q1 2018, and Shell will pay between $193 million and $217 million. In the past few months, it has also said it will develop a 20 MW solar PV project in the Netherlands, acquire the U.K.’s largest independent energy company, First Utility, install 250 MW in Australia, and invest in Singapore's Sunseap.

Regarding the trend for private PPAs, BSR’s Harding said, “It demonstrates the commitment from industry to look to promote and use renewable energy whether that be wind, solar or any other renewable technology.

“This demand for renewable energy is a positive thing for the industry in general and consistent with the principles underpinning the Clean Growth Strategy published by the Government last October – it will be interesting to see how detailed government policies will be tailored to drive this strategy forward and how the industry is able to innovate to reduce costs and create bankable business models in a low or no subsidy environment.”

To date, BSR has signed three PPAs for its U.K. solar PV plants. In addition to the deal with Shell, it inked deals with the HSBC Bank for its 60.8 MWp Swindon Solar Farm; and with British papermill, UPM, for its 72.2 MWp Shotwick Solar Farm.

Looking ahead, while nothing concrete has been agreed upon, Harding did say that BSR is open to working with corporates to arrange and agree PPAs, if the opportunity arises. Overall, the company has built 500 MW of solar PV in the U.K.