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Case Studies

ABO Wind gain market advantage with sharper pricing and more accurate project evaluations

3 min read

The client

Founded in Germany in 1996, ABO Wind develops wind, solar, and biogas projects across 16 countries in Europe, Africa, and the Americas. Its biggest market is Germany, and it has a large footprint in Spain, Ireland and France.

The company has developed 1,115 power plants with a total capacity of over 3.6GW. ABO Wind 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 Wind needed to increase its pricing intelligence and knowledge of PPA contracts to manage and thrive in the new landscape.

Ryan Bernard, head of energy sales and markets at ABO Wind explains that the company sells its projects when they are built, mainly to utilities or funds. He says attaching a PPA before projects are sold can be beneficial.

“Having a PPA attached can support 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,” he says.

“However, understanding the potential PPA prices you could achieve means you can evaluate a project more precisely. Having an offer or a benchmark price is needed for this, however, pricing is not easy to find and so we rely on Pexapark for this.”

Pricing for wind projects varies significantly based on the location and the technology used, making it more complex to evaluate new opportunities.

Additionally, PPA contracts require expertise to construct the best structure and terms to maximise the potential project value. ABO Wind had the decision to build this expertise internally or look to work closely with third parties.

After consideration it was deemed more cost effective to work with specialised organisations such as Pexapark.

How we help

ABO Wind 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. The company selected Pexapark to provide understanding of:

  • Common PPA structures available and active PPA buyers in their target markets
  • Regulatory changes that could affect asset and power prices
  • The exposure it will face to feed-in tariffs and merchant power prices
  • Clear and frequent updates on PPA pricing before it invests
  • Locational pricing to accurately value its renewables assets

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.

Pexapark’s suite of tools allows ABO Wind to bypass the time and resources needed to build up internal expertise for renewable energy trading. This is a significant hurdle for many developers in an increasingly merchant market.

For example, our PPA price reference platform enables the company to:

  • Continually assess PPA pricing to keep an eye on the development value. This gives it the ability to make further adjustments on timing for example if needed to meet financial project goals.
  • Helps it to assess investment projects using accurate data, including locational pricing based on market data and expected production for specific projects.
  • Gives it transparency that helps it assess if off-taker prices are fair.

Berhard says this makes its 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.”

ABO Wind was also one of the first users of Pexapark’s locational pricing tool, which highlights the huge differences that operators can achieve in the returns from their projects based on different types of turbine and location.

He says: “We make intensive use of the locational pricing feature to value the project against the market level, to give Investors the info they need to see. We want to see if the project is better than the market and what financial impact there is by adjusting the sizing or timing of the COD [commercial operation date].”

The future

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

Bernard adds that ABO Wind will continue to rely on these tools: “For us, what is most crucial is the data 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,” he says.

If you’d like to find out how we can help you, get in touch.

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