What does Revenue Perspective for Generators look like in 2018 - Quarter 3 and 4?

Generators have a positive outlook ahead, with the longest number of coal free days in history, significant strength in the UK power price market and increased volatility in the short-term market. Following the Generator Revenue Stream Forecast webinar in June, Chris Smith, Head of Renewable Sales, explores what is in store for generators for the remainder of the year.

The renewables industry is continuing to grow in importance, as renewables now comprise 30% of capacity in the overall electricity mix, which meets a section 2020 EU energy target.

Despite the lack of subsidies to support new generation projects, the power market and ROC values certainly sees an improving financial return for independent renewable generators.

This year we saw the longest number of coal free days (three full days) since the 1880’s. To fill the gap left by the inevitable demise of coal, BEIS forward forecasts predict more renewable electricity will be required.

UK Power Price Market strengthens

Over the last two months we have seen power prices increase from £47MWh at the start of April to £57MWh at the start of June.

The two important factors creating this price hike were - the shortages of gas in Europe caused by unplanned outages, and low hydro generation in Norway due to a continued and unseasonably dry period.

Generally, the shift to using less coal and more renewables has led to more pressure on fuel supply again pushing prices up, which is all good news for generators looking to fix their price now.

Taking advantage of volatility

We are expecting volatility to increase with the introduction of Price Average Reference (PAR1) in November 2018, which will change the way system prices are balanced to create a fairer system.

Many European countries including Germany have this type of a cash out system. Historic data shows us whilst the average price is lower in these markets there will be greater intraday volatility, higher price peaks and more frequent negative prices.

With Triad benefits being cut by a third and embedded benefits taking a hit, taking advantage of these volatile periods and maximising revenue has never been so important.

The best way to leverage opportunities for the remainder of the year is to become more flexible though your Power Purchase Agreement (PPA). Selecting the right PPA is crucial. If you would like to know more, download our guide – choosing the right PPA for you.

To find out more about what we discussed in our most recent webinar, watch some short snippets from the webinars here.

Our next webinar, where will give an updated forecast on generator revenue streams, will be on Wednesday 12th September 2018, to make sure you receive invitations to all our future webinars, please sign up here.

About the author

Chris joined SmartestEnergy’s Renewables team in 2017 from Danish energy trading company Neas Energy. He works with generators to develop solutions to help them maximise returns in a changing environment for renewable projects. Chris began his career in the energy sector in 1996 with Eastern Natural Gas. He went on to work as a Generation Services Senior Business Development Manager at RWE npower, developing PPA solutions for customers. He has also worked on the supply side with industrial and commercial users. His role as Business Development Manager at Neas saw him build its UK PPA and CHP portfolio from market entry. Chris has a BA in Business Studies from De Montfort University, Leicester.

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