Let’s keep on exploring the data challenge that renewable energy producers face. We previously explained how market based revenues were first introduced as Market Premium Schemes by Germany and then how they were widely adopted at EU level.
Read all previous posts here!
So let’s have a look today at the Market based revenues factor – Episode 2
2022 – Energy Crisis
In 2022, for various reasons combined (Russia invasion of Ukraine along with low nuclear availability in France and lower rainfall), EU was struck by the Energy Crisis were power and gas prices skyrocketted. During this period, spot gas prices reached more than 300 €/MWh and spot power prices 1000 €/MWh.
How did this crisis relate to our topic « market based revenues for renewable energy producers »?
We shall not forget two side effects of the 2022 energy crisis:
- Renewable producers realized that with such high prices, they could sell their production at a much higher price than their fixed price long term contracts and that it could be worth being directly exposed to the market. At least for a part of their portfolio!
- At the same time, some aggregators realized that it was very difficult to cope with such market conditions as balancing fees exploded and risk management got more critical (risk models were suddenly overtaken by the Crisis). Many aggregators understood that it might be time to leave more risk on the producer’s side, in order to de-risk their activity.
Meaning producers are willing to or will have to expose themselves on the energy market. Not necessarily 100%. But this is clearly our feeling.
2023 – Reform of the electricity market design
Back in March 2023 and consecutive to the 2022 crisis, The European Commission proposed a reform of the electricity market design that was adopted in May 2024. The reform objectives are to make EU energy market more resilient and have energy bills prices less dependent from short term market price. This goes with a clear trend to push both PPA and CfD markets forward. Meaning producers will be more exposed to market based revenues.
The rise of batteries
Along with the rise of renewables, we recently assisted to the batteries market take off. Some assets are already online and many projects are in the pipes! Often coupled with renewables, batteries are by definition a market based asset. Even a multi-market based asset that combines energy and ancillary services revenues. Batteries are another reason for renewable producers to face market based revenues.
As a conclusion
Here are the reasons (some reasons, we might not have an exhaustive list here!) why renewable energy producers are now more and more exposed to market based revenues.
Of course, on the one hand we could still argue that thanks to aggregators and their pivotal role in selling renewable production on the market on behalf of producers, producers do not directly face market based revenues. The aggregator still takes all or part of the market risk. But in the end, if we look at the ecosystem, renewables revenues are market based.
On the second hand, we see that the more advanced producers are already active on energy markets, taking market members and BRP responsibilities while at the same time integrating energy trading skills and software. And at Xtra-energy we think this trend will increase in the coming years. And even if a producer does not directly trade energy on the market and buys aggregation or « trading as a service » services he will one way or another be exposed to energy trading risks. And will have to handle it!
Which in the end inevitably means more data to handle for renewable energy producers. Data of a new kind and a new complexity.
This is why we have launched Xtra-energy. We are conviced that renewable energy producers will sooner or later face data & market challenge and will need the appropriate tools to handle their data and their market based revenues. Do not hesitate to contact us for a chat or a demo!
Read all previous posts here!
At Xtra-energy, our mojo is « Turn renewable data into action ». Being exposed to more and more data, renewable energy producers need adapted solutions. That is why we provide the Xtra-energy platform that offers following functionalities:
- Data extraction, centralisation and sharing
- Asset management, Contract management, Energy trading and Reporting
Do not hesitate to contact us if you want to discover our services!
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