Press Release

Flexible asset power purchase agreement market is small but highly competitive

Research from Cornwall Insight’s Flexible Asset Power Purchase Agreement Market Report enables comparisons between the different markets for renewables and grid flexibility assets. The primary differences between the two sectors is size.
Cornwall Insight

The total size of the flexible asset market is much smaller than that for renewables, with the total capacity for flexible assets estimated at 4.5 GW in 2019, compared with renewables’ 40.6 GW.

Charlotte Farmer, analyst at Cornwall Insight, said: “It not just the size of the market that differs, the proportion of each market where developers are seeking PPAs from the off-taker market is significantly different. With up to 65% of the renewable market looking for a third-party PPAs compared to just 40% of flexible asset capacity seeking this option.

“This stems from the higher proportion of utilities and large developer-trader organisations which will trade and optimize their flexible assets independently. In contrast, the renewables market has seen a higher level of independent developers, often without trading capabilities or relevant industry licences, that have required third-party PPAs for the off-take of their power.

“Despite the smaller size of the contestable flexible asset market the sector is still highly competitive – with up to 20 off-takers competing to contract with flexible assets.”