TC1162 Power Purchase Agreement

Tender description

Manchester City Council (“The Council”) has set an ambitious Climate Change Action Plan for the period 2020-25 to achieve reductions of the Council’s direct emissions by at least 50% by 2025, while aiming for a further 50% reduction between 2025 and 2030. The Council’s mission is to make Manchester a healthy, green, socially just city where everyone can thrive. The target is to become a zero-carbon city by 2038 at the latest, 12 years ahead of the Government’s target for the UK of 2050. To help achieve its mission, the Council has committed to securing 100% renewable electricity by 2030 and renewable PPAs are considered an integral part of its energy procurement and sustainability strategies. The Council therefore sought to sign a long-term offsite virtual Power Purchase Agreement (“vPPA”) with a wind or solar PV developer with a project that has REGOs that are valid for the Council’s Scope 2 reporting (i.e. REGOs that are valid within Great Britain). In the interest of creating ‘additionality’, the Council sought a “new-to-earth” project, which is not yet constructed but has received permits and consents from local authorities. The geographical specification of England, Scotland and Wales (and not N Ireland) was made to ensure that the Council is not exposed to pricing base risk from settlement with an asset outside of the Council’s consumption base i.e. outside of Great Britain. The Council sought a virtual PPA (contract for difference) of either 10 or 15 years from a c.35 GWh/yr project with anticipated commercial operations by the end of September 2025, but earlier start dates being preferable. A single project or a portfolio of small projects from a single developer is preferred. The selection of a virtual PPA contract was made to ensure the Council minimises contractual complexities from entering into more than one PPA with a developer and the electricity supplier. Uncertainty over sleeving fees and availability of the services was also part of the decision. Keywords: vPPA, Solar, Wind, Renewable, Energy