Our Energy team has advised Statkraft on a ten-year power purchase agreement (PPA) and optimisation agreement with international investor FP Lux Group (FP Lux) advised by re:cap global investors ag (re:cap), covering Scurf Dyke solar farm and battery near Driffield, in the East Riding of Yorkshire.

With an installed capacity of 80.6MW, the solar farm it is one of the largest solar schemes in the UK. BayWa r.e. acted in an EPC role to develop and construct the project, whilst their Asset Operations division will assume responsibility for the operations and maintenance of the site on a long-term agreement. FP Lux and BayWa r.e. are also constructing an 8MW BESS adjacent to the solar farm, which Statkraft will optimise.

This is the latest PPA Statkraft has signed for projects that have received a Contract for Difference (CfD) from Allocation Round 4 (AR4). As with other PPAs in Statkraft's UK portfolio, the generator is able to set a minimum strike price, which, if not achieved in the day-ahead power auction, will lead to the asset being down-regulated. This means Scurf Dyke Solar Farm can be turned off by Statkraft so that the solar farm avoids generating power during negative price periods.

Any projects from AR4 will not receive a top up under the revised CfD mechanism for any output generated during a negative price period. However, Statkraft can manage this risk for generators via its well-established Virtual Power Plant (VPP) system. Statkraft's VPP has been used effectively for a number of years to manage its renewables PPA portfolio in Germany and elsewhere in Europe, and to optimise its flexible generation portfolio in the UK.

As Scurf Dyke solar farm was project financed, it was important to have a long-term offtake contract in place so that there is a clear route to market for power and REGOs. Statkraft has worked with all of the lenders active in the UK project finance sector, therefore the documentation and processes are familiar to banks, investors and advisors. Statkraft AS (S&P A rated) provided a Parent Company Guarantee, as requested, as it has many times since it signed its first UK renewables PPA in 2010.

Gowling WLG has advised Statkraft on UK PPAs for more than a decade. The legal team advising Statkraft was led by Gus Wood (Partner), supported by George Nixon (Associate).