The Department of Energy and Climate Change confirmed plans to establish an offtaker of last resort for prospective solar generators and other independent renewable power producers who might struggle to find a counterparty to long-term power purchase agreements. Such deals are vital to getting a decent price for their output and to securing debt and equity finance for their projects.
The decision to introduce a offtake backstop was sparked by concern that the contract for differences scheme under ERM could leave generators that did not have a supply business struggling to secure a customer for their power. CfDs, unlike the Renewables Obligation which they will replace put no obligation on suppliers to take a proscribed quantity of renewably produced electricity.
Energy minister Greg Barker said the last resort measure will “allow new smaller players to gain a greater share of the exciting renewable energy market.”
A spokeswoman for the Solar Trade Association welcomed the move but warned that the government had tabled the amendment without consulting the industry. She said: “Any solution must work and establish the confidence and buy-in of the industry.”
The spokeswoman said the association would back the amendment in the Lords that not only supports the backstop but also includes an option for a Green Power Auction Market (GPAM). The GPAM is anticipated as a means for small renewable producers with CfDs to receive their own reference price through a regular auction on a long term basis.