A solar farm near Tata Steel’s Scunthorpe plant has saved the steelworks £230,000 in energy costs in less than a year, demonstrating the growing potential of power purchase agreements for the UK solar sector.
The 39MW Raventhorpe solar park was connected directly to the Tata Steel facility in April 2015 and has saved the company a noticeable percentage of its energy requirement between connection and the end of last year.
Richard Jackson, Tata’s manager for energy optimisation, said: “The average supply contribution since April last year has been 5.34MW, which is around 8% of our bought-in requirement. The figure is slightly below expectations due to a cloudier summer than average but it still reduced our cost by more than £230,000 to December 2015.”
The site was originally developed by Kinetica at a cost of £48 million, who made the PPA agreement with Tata Steel to provide dedicated power to the Scunthorpe site. It was bought by Canadian firm Fengate Capital Management in December 2015, when there was a suggestion that the private wire deal may only continue until a grid connection could be secured.
A spokesperson for Tata Steel confirmed this was still the case, saying: “Our understanding is that it [the Raventhorpe solar farm] is supplying solely to Tata Steel only until the National Grid connection is made.”
The company is continuing to identify more renewable energy projects to not only lower its costs in the way that Raventhorpe has, but also to fall in line with the growing trend towards a low carbon future following agreements made in Paris at COP21 in December.
“The nations of the world have reached an agreement in Paris to work towards minimising damaging climate change. A large part of this agreement is to reduce the use of fossil fuels and produce more energy using renewable technologies,” Jackson added.
“We’re pursuing the potential for further renewable projects on all our sites in the UK.”
Following cuts to subsidy support for solar in the UK, the potential of PPAs to secure deals for new projects has grown. Speaking recently at the Solar Finance and Investment event in London, a panel of solar industry representatives concluded the UK market was moving towards a PPA driven model as businesses seek insulate themselves from fluctuating energy prices and changes in supply.
Bluefield Solar Income Fund yesterday praised its PPA strategy after it was able to offset potentially significant loses occurring from changing market conditions.