UK energy provider OVO has bought a minority stake in the clean energy marketplace Renewable Exchange. The announcement follows OVO’s purchase of SSE’s retail arm for around £500 million.
The Renewable Exchange allows renewable energy asset owners to compare bids from multiple parties for their electricity. The organisation has helped install a capacity over 1GW of renewable energy via their power purchase agreements. They intend to use OVO’s investment to hasten the development of its digital power purchase agreement market platform.
Once complete, the digital power purchase agreement market platform will connect even more distributed renewable energy generators to suppliers.
Clean and Affordable Energy for More Customers
OVO’s founder and current Chief Executive Officer, Stephen Fitzpatrick, said of the deal:
“Renewable Exchange is the UK’s leading digital platform, connecting independent renewable energy generators with buyers and bringing simplicity to an increasingly complex energy system.
“We’re delighted to be working with Rob [Robert Ogden, founder and Chief Executive of Renewable Exchange] and his team to bring clean, affordable energy to more customers.”
How Power Purchase Agreements Work
A power purchase agreement (PPA) can sometimes be referred to as electricity power agreement. In basic terms they are contracts between a generator of electricity and someone seeking to sell electricity.
The details of PPAs define items such as the commercial terms for the sale of electricity between both parties. This covers issues like when projects start commercial operation as well as whatever schedule for delivery is agreed upon. Additional parts of PPAs include payment terms as well as any contract termination details. There may also be penalties outlined for any failure to deliver the agreed amount of electricity. PPAs are also crucial elements of project finance as they define the revenue and credit quality of energy generation projects.
Ultimately, the details of any particular PPA will be determined by the requirements of the individual buyers and sellers involved.
How the Renewable Exchange Works
Renewable Exchange is based in Bristol in western England and operates 717 generators. They have an installed capacity of more than 1GW connected to the power purchase agreement (PPA) platform. They cultivate their expertise in PPAs by tracking the market and communicating with as many different energy suppliers as possible.
Energy generators with renewable energy assets use the Renewable Exchange to maximise their potential earnings. The deals available make renewable energy PPA tenders more profitable and help grow a company’s network of offtakers.
An ‘offtake agreement’ enables energy generators and buyers to purchase or sell portions of the electricity generated. Usually such agreements are negotiated prior to the construction of a production facility. It is this pre-agreement negotiation that make the Renewable Exchange so important to their clients’ project finance plans.
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