A new 500MW portfolio of solar and wind is under development as part of a joint venture between Cubico Sustainable Investments and Peel NRE, with the two to originate, develop and operate the portfolio of projects over the next 5-10 years.
A mix of private wire and grid-connected developments, the portfolio is designed to “really build momentum” according to Matt Boss, head of Northern Europe at Cubico Sustainable Investments. Solar Power Portal caught up with Boss to discuss the need to have a clear route to market from day one, the potential to bid into the Contracts for Difference (CfD) and the “huge demand” for corporate power purchase agreements (PPAs).
How did the joint venture with Peel NRE come about?
In talking to Peel, it became pretty clear that we both shared a vision about what could be possible in the UK market, and very quickly, when we got talking to them, we realised that we had some pretty complementary skills. In fact, the more we got into discussing with them the potential for a joint venture, the more we realised that our capabilities fit like a glove. They've got a lot of deep experience in UK development, both on the land side but also in renewables in the past; Cubico's got the technical, the construction and the operational skills to bring projects about. So everything you need to take a project from cradle to grave is there when you look across our two companies.
I think 500MW is a good target. It's sufficient scale to really build momentum for a joint venture like this. I mean, who knows, we could go bigger as well, but it gives us a good size pipeline, and it's a good size to give us critical mass and really build a team and a joint venture around.
How does developing in the UK compare to Cubico’s other regions?
Cubico is a leading renewable power provider across a number of markets, and we're particularly strong in Europe, the Americas and Australia. So we've got around 2.9GW of operational capacity now, with around 2.5GW in construction and development. We cover the whole energy chain from development through to construction and operation, but we're proud to call the UK our home market.
We've been based in London since the company was formed in 2015 and we've got a good established portfolio in the UK. We've got around 150MW of operational PV and 100MW of operational wind in the UK. It's an established mature market, it's got great renewable resources and a good pool of talent, and I think we see this as a good moment and a good time to be developing in the UK. When you think about the net zero legislation, and the upcoming CfD auctions, all the signs are very positive for greater renewable deployment.
We certainly will look at [the CfD]. The one this year might come too soon for us, but we'll certainly take a look iif there are projects that we can identify that could be ready in time for that.
This new portfolio is to be a mix of private wire and grid-connected developments. Why were you looking at both of these options?
Like everyone else, we've got to be creative, and we've got to be flexible in trying to find ways to reach the end consumer for our power. I think the days of build it and they will come aren't really with us anymore. We have to develop projects from day one with a clear idea of what our ultimate route to market is going to be. And so that leads you to having a mix of grid-connected and private wire developments.
How receptive are companies to signing a PPA?
I think that they're very receptive to them; there's this huge demand for our product at the moment. Renewable power is hugely in demand. The challenge is always going to be to balancing the generation profile with the demand profile. So I think that's the conundrum that has to be solved. And while private wire's got its attractions in avoiding certain grid costs, you've got to find a solution to balancing generation with consumption and grid-connected PPAs are a great way of achieving that.
Having been operating in the UK market for a number of years now, what has it been like to see the change from a heavy subsidy market to one that is moving much more to subsidy-free?
I think there have been significant changes in that period. In many ways, it's really testament to the successful deployment of renewables over that period; we've seen costs really plummet, particularly in PV, but in wind as well, and so as a result things change.
I'm delighted that renewables can now compete without the need for the extensive support that they may have needed in the past. I think the challenge now becomes to find ways of reaching consumers, and contracting with them in such a way that can underpin a project investment. The CfD is definitely one way of doing that. Obviously, we see more in the way of corporate PPAs now as well. So for sure, the market is shifting, but I think it's really a sign of the success that renewables has had.