Wood has launched a new power price forecasting (PPF) service to help provide customers with greater certainty around the financial return they can expect from investment in renewable energy projects.
In recent years, significant reductions in renewable energy generation costs has seen many governments remove the financial subsidies traditionally available for renewable projects and instead turn to competitive auctions to extract the lowest cost possible for electricity procurement.
This has fundamentally changed the level of risk facing developers, investors and lenders on renewable projects as they’re now exposed to a more volatile merchant price rather than a fixed rate. As a result, they need to apply much greater rigour over their future revenue assumptions, all of which requires detailed insight on electricity price forecasts.
Wood’s new PPF service will provide customers with clarity on real-time electricity costs, plus an ability to simulate future costs based on a range of different scenarios. This dynamic solution enables them to see where the investment risks and potential upside opportunities could lie throughout the lifecycle of a renewable project based on forecast electricity prices.
Bob MacDonald, CEO of Wood’s Specialist Technical Solutions business, says, “Our PPF service enables customers to make more informed commercial decisions during capital intensive transactions. With unsubsidised project development activity increasingly common, and wind and solar levelised cost of energy at, or below merchant power prices, understanding the long-term trends in energy and merchant power markets has never been more important.”
“Our customers are also keen to understand the economics of asset life extension on renewable energy projects and the impact that the decarbonisation agenda will have on their business models. By combining our technical skills and our commercial modelling expertise, we can help customers make smarter decisions and optimise their financial return at all stages of a project,” continues MacDonald.
This new service strengthens Wood’s position in clean energy and all aspects of the energy transition including; generation, storage, transmission, carbon risk, sustainability and related environmental and social impacts.