By Paul Homewood
https://www.lightsourcebp.com/uk/ppa/
The solar power industry in the UK has been seen its business virtually dry up to nothing in the last year or two, following the ending of ROC and CfD subsidies.
However, they are attempting to resurrect themselves by doing direct deals with end users. Lightsource BP, who say they are largest operator in Europe, are one example and have been offering their package to large users:
Their projections of electricity prices are startling, but confirm what I have been saying for sometime. While wholesale prices change little, green subsidies and grid transmission costs will carry on rising remorselessly.
Eyeballing their chart, non commodity costs will have risen from about £48 to 80/MWh, between 2016 and 2020, adding about 40% to end user prices.
These costs will continue to rise at least until 2030.
So what can Lightsource offer potential clients?
The ability to fix costs years ahead is obviously an attractive one, but how can businesses save 25% off their electricity bills up front? After all, we know that solar power is hopelessly uncompetitive against conventional generators.
The answer is simple. The solar farm, built and maintained by Lightsource, is “hard wired” straight to the customer, via a private wire.
By doing so, the customer avoids paying for all of those network charges and green levies. Based on the 25% saving quoted, we can guesstimate that prices will be in the order of £90/MWh, probably index linked as well.
There are two huge ironies here:
1) Most of the green levies are needed to pay for renewable energy subsidies and the costs of coping with their intermittency. Why should new solar power users get away with paying their share?
2) Because of the intermittency, Lightsource’s clients will still need to rely on that “old fashioned” grid to keep their lights on and computers running.
Large energy users opting for their own solar farms won’t do anything to reduce network costs or green levies in total. It just means that the rest of us have to pay for their share as well as ours.
Indeed, as more and more of these corporate power purchase agreements (PPAs) get to be taken out, the more costs will be loaded onto the grid to deal with increasingly intermittent renewable generation.
Lightsource’s offer is for businesses using at least 5000/MWh, which would mean £500,000 plus. So only big companies need apply, like Belfast International Airport, Bentley Motors and Thames Water who are already on Lightsource’s books.
Nobody can blame businesses from looking after their own interests, but it is the rest of us who will have to pick up the bill.
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March 8, 2019 at 01:04PM
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