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Case Studies

ABO Energy leverages more accurate project evaluations

3 min read

The client

Founded in Germany in 1996, ABO Energy develops and builds wind and solar farms as well as battery and hydrogen projects worldwide.  Its biggest market is Germany, with a large footprint in Spain, Ireland and France.

The company has developed and sold 5.5GW and has a current development pipeline of 23GW with grid connection in addition to 20 GW of green hydrogen. ABO Energy works on projects from the planning stage until they are turnkey-ready, at which point it sells the schemes to utilities and investors.

The challenge

The market is moving away from tariffs that offered fixed revenue streams. With this change comes a key barrier for renewable developers: the secrecy around PPA prices and lack of knowledge on how utilities price PPAs.

As a developer of renewable energy assets in multiple markets, ABO Energy needs to have visibility of what’s happening in the market, PPA pricing intelligence and a strong understanding of the factors that may impact pricing across its active markets. To thrive, Abo Energy needed a dynamic view of the market to stay up-dated as prices evolve.

Katharina Doyle, Team Lead Energy Origination Central and Western Europe at ABO Energy explains that the company sells its projects when they are built, mainly to utilities or funds. She says attaching a PPA before projects are sold can be beneficial.

“Having a PPA attached can increase the value of the project, although some funds would prefer to source their own, so we don’t always attach a PPA to the asset,” she says.

“Regardless, understanding the potential PPA prices a project could achieve enables you to evaluate it more precisely. Having an offer or a benchmark price is needed for this, however, markets are not transparent so pricing is not easy to find. We rely on Pexapark for this.”

Over recent years there has been increased volatility in renewable power prices, making understanding the fair value of a project ever more challenging. Sellers need to request multiple offtaker bids to get an indication of prices, which is time consuming and in today’s fast paced markets quickly becomes outdated. So after consideration, it was deemed more cost effective to subscribe to PexaQuote for market based PPA reference pricing and insights.

How we help

ABO Energy recognised it would be able to take advantage of development projects in merchant markets if it had greater insights on dynamics in the PPA market. Pexapark’s market based pricing and intelligence platform provides:

  • A trusted view of PPA prices and understanding of the fair value for their power across target markets for common PPA structures,
  • Analysis of key market changes that could impact asset and power prices across the markets they operate in,
  • An understanding of how offtakers price risk differently into PPAs and value the ‘green premium’ with visibility of the upper and lower range of utility and corporate bid prices in specific markets,
  • Visibility of differences between baseload and captured prices for wind across its key markets

This knowledge helps ABO Wind to decide which projects to pursue based on whether they would be economically viable to develop; and work out the value of its assets, compared to market levels, when it looks to dispose of them. This is of value for ABO Wind in both established and emerging markets.

PexaQuote, Pexapark’s market based pricing and intelligence platform speeds up price discovery and provides ABO Energy with better market visibility, making its PPA transactions more efficient. This is a significant hurdle for many developers in an increasingly merchant market.

Benefits ABO Energy gains are:

  • Ability to continually assess PPA pricing, this enables ABO Energy to monitor changes to the project value over time and identify if further adjustments should be made, such as timing for COD, to meet financial project goals
  • Visibility of forward price and capture curves helps the assessment and valuation of investment projects
  • Market transparency helps ABO Energy assess if off-taker prices are fair and PexaQuote data supports PPA transaction negotiations

Katharina says this makes ABO Energy’s approach to assessing deals more rigorous.

“We can have a rough feeling and understanding of where the differences lie but, as a developer, we are not familiar with the details of pricing or how the profile risks should be remunerated, for example.”

Katharina says: “We make intensive use of PexaQuote’s data, it is used to support our investor reports, economic feasibility reports and project valuations. It also helps us demonstrate if the project is performing better than the market and to assess what financial impact there is by adjusting the sizing or timing of the COD [commercial operation date].”

The future

ABO Energy says Pexapark’s pricing and market intelligence gives the company an edge in the market, by providing insights into the value of potential sites based on available resource, different PPA structures, and market trends.

Katharina adds that ABO Energy will continue to rely on these tools: “For us, what is most crucial is that the data provided is in balance, accurate and highly reliable. As a developer, I don’t need rocket science functionalities, I want something that is easy to use and Pexapark’s solution fits all of these criteria,” she says.

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