UK's Co-op Power tenders innovative aggregated power purchase agreement

The UK's Co-op Power has tendered 100 GWh/yr on a new aggregated power purchase agreement platform set up by digital company Zeigo, the companies said Dec. 7.

Parent group the Co-op is to be the "anchor tenant" in the deal, offtaking the majority of the volume in what the companies say is the UK's first aggregated PPA offering.

"This will help open this avenue to businesses that otherwise might not have the energy requirements to do this on their own, into impactful, traceable renewable energy agreements directly with generators," Zeigo said.

No price offer or estimate was put on the tender.

Zeigo's Senior Price Analyst Freddie Lyons told S&P Global Platts that "at GBP52.50/MWh, our latest averages of UK PPA pricing are slightly higher [than Q3's average GBP48.10/MWh]."

These prices are still considerably below forward baseload prices in the UK wholesale market, with Platts assessing Winter 2023 at GBP94.70/MWh and Summer 2024 at GBP69.30/MWh Dec. 6.

All PPA offer prices on Zeigo's platform included the cost of guarantees of origin, Lyons said.

Platts assessed UK renewable energy guarantees of origin (non-bio REGOs, compliance period 20) at GBP5.25/MWh Dec. 6.

Aggregated PPAs look to build groups of corporations that individually may not have the energy demand or the buying power to enter into a bespoke (and often expensive to negotiate) PPA.

Anchor tenants in aggregated deals may also play a role in providing the necessary credit rating to ensure a project is bankable.

"Combining buying power to demand better value has always been at the heart of the Co-op movement," said Michael Mahoney, Energy Procurement Manager, at Co-op Power.

"It is vital we continue to work with other businesses to reduce costs and reduce carbon, we know from discussions with our own supply chain that 60% believe they don't have the resource to reach net zero alone," he said.

The biggest share of many companies' greenhouse gas emissions and cost reduction opportunities lay outside their own operations, said Zeigo CEO Juan Pablo Cerda.

"Corporates with large supply chains can use this approach [taking a leading role in aggregated PPAs] to ensure they run on renewable energy and reduce their Scope 3 emissions," he said.

The Co-op buys energy directly from seven onshore wind and solar PV projects under a long term PPA.

Subsidiary Co-op Power is pioneering a digital procurement process to secure clean energy options for its network.