“We create a sustainable energy perspective.”
We at SUMMIQ have decided to focus our portfolio on two power generation technologies: solar PV and wind onshore. In both cases, the technologies are mature and essentially calculable. Much more important for us is that the solar and wind power generation curves complement each other.
Solar plants produce their peak output in the summer, when the average energy production of wind farms is low. In contrast, wind farms run at peak performance in autumn and winter, when the sun’s rays are low.
By combining both types of generation, we achieve a more stable energy supply. The larger our portfolio, the more advantageous this smoothing effect will be. By investing in energy storage facilities, we aim to increasingly decouple our ability to supply electrical energy from the specific production cycles of solar and wind technologies.
Energy yield of wind and solar generation, Germany 2018 (in TWh)
The following graph, based on real data for one production year, illustrates the effect of the smoothing impact mentioned above:
We will use two different types of marketing channels for the electricity generated by our plants. These are either non-subsidised sales channels (e.g. market-based PPAs or energy exchanges) or subsidised marketing mechanisms (e.g. FiTs or subsidised direct marketing; the latter is based, for example, on market premiums).
Both marketing channels depend on several influencing factors and are dependent on
- the respective country,
- the weather conditions,
- the regulatory framework,
- wholesale electricity prices, and
- of other market parameters.
We have decided to increasingly focus on power generation assets that sell the generated power to suppliers with appropriate credit ratings under freely negotiable, market-based power purchase agreements (PPAs). Subsidized marketing mechanisms play an increasingly minor role in future renewable energy generation.
In all core countries in which we intend to operate, statutory tariffs with a fixed and guaranteed price per generated kilowatt per hour electricity have either been substituted by auction models or have been completely abolished. As a result, corporate PPAs are becoming increasingly attractive as a marketing model for operators of renewable energy facilities to secure prices over a longer term.
A further reason for the increasing attention to corporate PPAs is the growing ecological awareness of the commercial offtakers. An increasing number of companies throughout Europe and the world are interested in buying renewable electricity to make their own electricity consumption sustainable. Some companies intend to even decrease the greenhouse gas emissions of their entire value chain thus requiring their supply chain partners to engage in procurement of renewable electricity through corporate PPAs.
The growing market for freely negotiable PPAs is a direct result of the success of renewable energy generation and proves that renewables are fully marketable. For this reason, too, subsidy measures will hardly play a role in the future.
Global capacity additions of corporate PPAs 2012 to 2018 (in GW)
The volume of marketed electricity by corporate PPAs has increased significantly on a global scale (as shown in the chart below).
An alternative to corporate PPAs are utility PPAs. They are agreements with so-called aggregators such as utilities and retail companies with a large customer base that want to resell the purchased electricity.
Modern portfolio structure and low cost structures add up to competitive strength
The combination of two types of energy generation is advantageous in itself. In addition, new PV and wind installations can also create an additional revenue stream by selling GOOs (guarantees of origin) to corporate customers and to aggregators that serve retail and mass customers. Each GOO is related to energy from renewable sources in the amount of one MWh and is granted by the respective competent national authority.
Not all of our generating plants will meet the requirements for marketing GOOs. This could be opposed, for example, by subsidies for existing FiTs. GOOs are only granted and certified if the respective solar and wind parks do not benefit from specific state support schemes, while the granted volume of GOOs depends on the amount of power generated by these solar and wind parks.
Further, both technologies provide interesting upside potentials for follow-on investments, such as technological upgrading, repowering and combination with storage technologies.
New marketing and marketing know-how, however, gives SUMMIQ an advantage over a portfolio of older-generation plants, as our portfolio produces energy at comparatively low generation costs and thus has more potential to leverage its possible upsides.
Virtual Power Plant: marketing channel of the future
We aim to create further upsides from the marketing of the produced energy by participation in a virtual power plant concept. To achieve this goal, we will source the technology access from the best supplier on the market.
A VPP establishes a digital network of power generating assets in combination with an energy storage infrastructure. The planned production of a project connected to the VPP is automatically adjusted to the weather forecasts, the expected prices on the short-term markets as well the change in short-term consumption patterns of potential PPA counterparts or other offtakers. A central control system is then able to monitor, forecast, and dispatch the networked units, allowing it to control the output and enabling the most efficient use of production and power deliveries.
By using a VPP, we are able to combine different types of marketing and thus achieve the best possible results for the amount of energy generated. This will enable us to generate possible upsides by marketing produced energy on the free market.
The larger our portfolio of new generation plants becomes, the greater will be the synergy effects from efficient marketing.