Statkraft has signed a fixed-price power sales agreement (PPA) with Boralex for Limekiln Wind Farm, a 106MW onshore wind farm under construction in the Scottish Highlands. The project, located south of Reay, is due to come on stream by the end of 2024, producing enough energy for around 100,000 homes. This fixed EPS is crucial for securing future revenues and stabilizing costs, thus providing Boralex, which was recently condemned in France for its Lure photovoltaic power plant, with essential financial visibility.
PPA structure
The agreement includes fixed prices for part of the energy produced, as well as Renewable Energy Guarantees of Origin (REGOs). This APP was structured to provide Boralex with financial stability prior to project completion. Gowling WLG acted as legal advisor to Statkraft on this agreement. By securing prices before the end of construction, the APP enables Boralex to better plan and secure its initial investment.
Conditional Bidding Service
Statkraft includes a conditional bidding service enabling Limekiln to self-regulate in times of negative prices, reducing costs and relieving the grid. This service is managed by Statkraft’s Virtual Power Plant (VPP) system, used in Europe to optimize flexible generation portfolios. VPP enables efficient resource management and smooth integration into the energy market, minimizing financial risks for producers.
Optimization and Risk Management
Statkraft’s VPP is a proven tool that has been used for several years to manage the renewable PPA portfolio in Germany and elsewhere in Europe. Using this system, Statkraft can optimize energy production and minimize financial losses due to market fluctuations. This innovative approach enables Statkraft to offer solutions tailored to the specific needs of its partners, reinforcing the economic viability of renewable projects.
Comments from stakeholders
Michelle Lam, Director of Business Development for PPAs at Statkraft, emphasized the importance of this partnership in maximizing gains from renewable assets. She said, “With our extensive market experience, Statkraft is well placed to provide innovative solutions to maximize earnings from our customers’ renewable assets.” Youcef Khelif, Director of Energy Markets at Boralex, expressed his satisfaction with the financial certainty provided by the PPA, prior to the Contract for Difference (CfD) coming into effect. He added: “Statkraft has been an excellent partner and we have enjoyed our positive collaboration throughout the process.”
Project outlook
The conclusion of this PPA with fixed prices before the end of construction of Limekiln Wind Farm not only offers Boralex financial security but also demonstrates Statkraft’s commitment to supporting renewable energy projects with innovative market solutions. This partnership reflects the growing importance of PPAs in the financing of renewable energies, and the need for risk management solutions in an ever-changing energy market. The two companies plan to strengthen their collaboration in the future, exploring new opportunities to optimize energy production and project profitability.
This agreement represents a key step in stabilizing revenues from renewable energy projects and managing financial risks. By offering tailor-made solutions and using advanced technologies such as VPP, Statkraft and Boralex are leading the way in the renewable energy sector.
