Luca Pedretti
@luca_pedretti
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🇪🇺 Europe rocks 🚀Renewables soar 🏞️Outdoor calms #PPA
Zürich, Schweiz
Joined October 2011
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Pinned Tweet
God, grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference
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@solar_chase
Welcome to the club! It is a great little country to take care of. The best description of us Swiss I heard so far: we like to be precisely wrong 😀
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Batteries are killing the duck
In 2024, natural gas generation on an average April day in California hit a 7-year low.
This is a significant trend reversal from what we saw from 2021 to 2023 in CAISO.
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Chart of the year to date: Batteries are killing the duck
Full thread here:
In 2024, natural gas generation on an average April day in California hit a 7-year low.
This is a significant trend reversal from what we saw from 2021 to 2023 in CAISO.
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This path is likely to be followed by other markets too. Batteries dominate and commoditize frequency reserve markets within a few years...
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Big envy: Very nice
#PPA
market snapshot done by
@SPGCIPower
All in one page: break-even levels, capture rates, price indices, volumes
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European solar factories being squeezed out of the market
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Cost of Firming Intermittency. Or: The end of LCOE as a useful concept
Source: lazards-lcoeplus-june-2024-_vf.pdf
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This!
CATL's Tianheng. Energy density of 430 Wh/l, capacity 6,25 MWh, 20y warranty
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We: "Oh, the mighty AI electricity demand will crush grids, etc "
Google: "Data center compute output increased by 550% between 2010 to 2018. Electricity demand for that period increased 6%."
The industry will adapt.
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Surprise, Surprise v2.
Lots of renewable power in the grid, lots of negative prices
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🇪🇺 ICIS 2023 year in review
🔎A brief review of EU Electricity generation and demand in 2023 ⬇️
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Financing renewables: Looks cool but I don't understand it yet 🙈
Thesis: well-diversified renewable portfolios with professional revenue management using all liquid instruments produce equally stable revenue at a lower cost than ones with LT PPA.
What would a lender say?
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Problem: Solar Capture Rate of ~50% (Spain, March 2024).
Solution: co-locate 2h battery, 50% of capacity with grid charging. Hybrid capture rate of ~97%.
Source:
@Pexapark
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The future of renewables is "mixed portfolio, a bit of storage & not fancy at all hybrid
#PPA
structures": 90% hourly matching
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Unlocking the added value of co-located batteries in
#PPA
Hybrid PPAs are the future, and they command a premium. But how do you price that premium?
Understanding this is key to capturing the merits created by the investment in battery units. Welcome to the Age of Hybrid PPA.
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Jargon in the solar industry: Enter Solar Coaster
“There are slight profits, then longer periods of terrible margins, then bankruptcies and exits. We call it the solar coaster.”
You've made it to the Economist
@solar_chase
, congrats!
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European offshore wind set for pivotal 2024 as auction road map nears 50 GW
Source:
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One must love the power price dynamics at work in ERCOT.
This will be the normal interplay in all markets with high renewable & battery penetration
Source:
@ModoEnergy
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Important one by
@LionHirth
. And it is not just Germany. We have similar "balancing paradoxes" in other European markets
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Google's Clean Transition Tariff (CTT): A Model for 24/7 Clean Firm Procurement?
Google's new CTT, pioneered in Nevada with Fervo to power its local data center, is, in "PPA-speak," a utility-sleeved 24/7 PPA in the form of a rate option.
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**Nuke PPA in Belgium with ArcelorMittal**
In May, the Belgian government struck a groundbreaking 10-year
#PPA
deal with ArcelorMittal to provide nuclear power starting in 2025.
This move increases competitive pressure on the offshore wind PPA sector. The government will own
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“The grid is broken. Load will have to come to generation — at least some of it", Intersect Power CEO Kimber.
Intersect Power is investing $837M in three grid battery projects in Texas, set to go live in 2024. These installations will add nearly 1 GWh of energy storage,
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Yet another data center electricity demand forecast.
Source: BofA
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Solar power at the price of 2 pint of beer
The market value of the Spanish solar power stood at just EUR 8.7/MWh on average in March
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Record high number of negative power prices in Europe
Among others, negative impact on
#PPA
pricing.
Source data: EEX
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The European
#PPA
Market 2023 in one take
For all the details ➡ Pexapark PPA Market Outlook 2024:
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Octopus entering US markets
Worthwhile quote to consider:
"In the U.S., land of free markets and capitalist competition, market design largely blocks Octopus from rolling out its innovations, and instead protects the monopoly power of century-old incumbent utilities. There is
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An absolute masterpiece of
@JigarShahDC
on
@DecoupleMedia
unscrewing nuclear heads and putting them back into the context of what real-world politics, real word engineering, and real-world ambition and focus for nuclear actually should look like.
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Some hand-picked notes from Engie CFO Pierre Francois Riolacci
- Business model of CCGT changed to be driven by intra-day volatility rather than clean spark spreads
- their trading unit adding new services: BESS optimization, profiting from high demand for green
#PPA
, biomethane
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Why don't Chinese manufacturers capture a larger market share in Europe despite their price advantage?
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🇸🇪Another Swedish wind farm faces PPA-driven bankruptcy
71 MW Wind farm Aldermyrberget is facing bankruptcy. Owners LHI Group and EB-SIM want to renegotiate a 15-year PPA with local mining company Boliden
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Germany: Boost for co-locating BESS & PV, more Hybrid PPA to be expected🚀
Germany’s long-awaited “Solarpaket 1” brings the abolishment of the "Ausschliesslichkeitsprinzip" (exclusivity principle), which previously prohibited batteries from storing electricity sourced from
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🇩🇪 Dislocation of the German
#PPA
Market
Interesting times in Europe's most important PPA market. The spread in bid prices has dramatically widened in Q1 2024 but deal flow has not (yet) slowed amid very high corporate PPA demand and willingness to pay a premium
Can this last?
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🇫🇷 France has awarded 1 GW of onshore wind capacity to 57 projects at an average price of EUR 87.23/MWh in its latest tender. In other words: Current price levels on the
#PPA
market would only allow for the construction of new solar but not on-shore wind in France
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Could do a slide every day from
@NatBullard
's fantastic deck.
Every quicker deployment and growth
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Big changes ahead in Italy: Starting 2025, the system spot price PUN will bephased out and replaced with zonal spot prices.
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@JHildenMinton
"Balancing" typically refers to a market where deviations from day ahead scheduled to actually delivered energy are priced (and exchanged) while "trading" refers to placing bets that e.g. prices will be low/high at a given point in time day-ahead and for that energy is
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Jede Stutz wert.
Ganz direkt und ehrlich: Operation Libero steht finanziell vor dem Aus.
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Solar PV modules are approaching the bottom of the cost curve, but the declining marginal benefits on total cost for utility-scale PV systems are becoming evident.
Source: IEA, BNEF, Canadian Solar
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European Union approves Romanian CfD auction ahead of launch 1 April 2024
And: I finally found a reference to
@Pexapark
in an official EU document. 😊
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🇩🇪 2.5 GW of stand-alone +10MW BESS projects planned until 2026 in Germany
Source:
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Revolution in the
#PPA
market. Vive la France! 🇫🇷
The French model with state-back credit guarantee support paves the way for an enabling framework that other nations could emulate to stimulate their PPA markets — a testament to the power of policy in accelerating the path to
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Battery storage in ERCOT: Ancillary Service prices are still tied to system scarcity. But batteries are making an impact - driving down prices vs Day-Ahead Energy in competitive services. The grid is evolving, just not how we thought!
Nice piece by
@ModoEnergy
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Reacting to some of the comments:
Yes, it is "only" for April. Hot months look different but there are more GWs of batteries being deployed
Yes, batteries don't protect against overall low prices
Yes, there will also be cannibalization of battery revenue due to battery
Chart of the year to date: Batteries are killing the duck
Full thread here:
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🇩🇪 Offshore wind farm powers green hydrogen plant under landmark
#PPA
deal
Quite a lot of things are covered by this PPA ⬇️
- 1'200 GWh annual production of which +60% is contracted via the PPA
- the PPA complements existing EEG subsidies by providing a blueprint for future
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The North Sea is poised to become Europe's renewable energy backbone.
Installations are being scaled up from 4 to 10 GW/a, with the eventual goal of reaching a total installed base of more than 250 GW. This rapidly growing industry is building a new super-sized energy system.
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What factors drive
#PPA
prices?
Next to absolute price levels, I find the market-specific divergences from reference prices the most interesting.
Example: In Germany, the deal flow is maintained by a selected group of industrial off-takers willing to pay a green premium
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The Battery rises in the West!
However, ERCOT will continue to be the most dynamic and interesting market to watch. By the end of 2023, it is expected that ERCOT will be catching up to CAISO in terms of installed solar and storage capacity.
via
@Platts
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What strategies do ERCOT’s largest battery
energy storage owners follow?
A great, detailed piece by the BESS masters of
@ModoEnergy
. And so many gorgeous charts
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Make sure to share some
#PPA
knowledge every day. Today, let's do a quick recap on all those beautiful structural acronyms! PAP, FHP, MBL...
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KPMG
#PPA
Accounting Webinar: "Most PPAs will have to be accounted for on a fair value basis"
Based on proposed IFRS reporting standard amendments currently being discussed, KPMG expects that "most PPAs will have to be accounted for on a fair value basis"
IASB are proposing
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Risks never disappear. PPAs simply convert market risks into credit risks.
Effectively manage
#PPA
credit risk with these 3 crucial insights:
> Revenue Exposure
> Replacement Risk
> Concentration Risk
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Solar capture rates in Spain remain below 50%
Lower expectations on future profile costs imply reduced revenue expectations, likely driving down the achievable debt ratio for new projects.
Source:
@Pexapark
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🇫🇷 France solar auction awards +900 MW at an average of 81.90 EUR/MWh
Why pay so much?
#PPA
can deliver the built-out so much cheaper...
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This podcast is worthwhile!
While we discuss energy investments extensively, we often overlook the topic of energy efficiency. We waste a staggering amount of energy (+60%) without any practical use!
Check out the episode here:
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