Unlocking Additional Value Through Smarter Generation and Allocation

Article 5 of 6 from the Series - P2P for Large AD Generators

In the previous article, we explored how P2P can provide existing commercial teams with additional options when deciding where generation should be allocated.

This naturally leads to the next question:

How Do These Additional Options Create Incremental Value?

The answer lies in recognising that different consumers value electricity differently, and that those requirements can change over time.

For many large AD operators, the opportunity is not simply about finding a new buyer, rather, it's about matching different elements of generation output with different strands of demand.

Creating Premium Baseload Revenues

Many industrial and commercial consumers have substantial, predictable electricity requirements. Increasingly, these organisations are seeking long-term access to provably clean, traceable power.

This creates an opportunity for AD generators to allocate a selected portion of their baseload generation to these buyers. Importantly, this does not require the entire portfolio to be committed.

A generator may choose to allocate only a modest proportion of its output to P2P arrangements, whilst retaining the remainder within existing contracts and optimisation strategies.

The objective is to secure premium recurring revenues from highly motivated consumers, whilst maintaining commercial flexibility.

The illustration below shows a typical consumption profile for a large industrial customer over the course of a year.

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Large energy users often have significant and predictable baseload requirements that can be matched with renewable generation.

One important observation emerges from this profile. Even the customer's minimum demand substantially exceeds the output of a single AD plant.

As a result, the customer may seek supply from multiple renewable generators simultaneously.

This allows both parties to participate within a wider ecosystem of renewable generation, rather than depending on a single supplier relationship.

Looking Beyond Baseload

Baseload demand is only part of the picture.

Many large consumers also experience regular changes in demand driven by operational activity, production schedules or business cycles. These changes create additional commercial opportunities.

The same customer whose baseload demand creates recurring revenue may also require additional electricity during specific periods when consumption increases.

For generators with flexibility in their operations, or with spare generation capacity available, this creates another potential destination for their power.

From Fixed to Dynamic Allocation

The chart below shows the same industrial customer’s demand over a shorter period of time.

On top of the baseload requirement, the consumption shows lots of ‘spikes’, both intra-day and between days.

[INSERT GRAPH]

Short-term changes in demand can create additional opportunities for generators with available capacity.

Looking backwards in time, these demand spikes may look quite random, but in reality they are very predictable between one day and one week ahead of time, based on production schedules.

This creates opportunities for corporate consumers to signal additional demand requirements and for generators to evaluate whether participation creates more value than alternative routes to market.

Importantly, this is not an either/or decision. Existing optimisation teams remain free to determine how available generation should be allocated between:

• Existing contractual commitments
• Wholesale markets
• Flexibility services
• P2P opportunities

P2P simply introduces another option into that decision-making process.

Working Within Operational Realities

Of course, every generation asset operates within constraints.

AD operators must consider factors such as:

• Feedstock availability and throughput
• Gas production and storage capacity
• CHP performance and flexibility to ramp up or down
• Maintenance requirements
• Existing contractual obligations

The optimisation strategy takes account of these realities.

The objective is to identify where existing operational flexibility and available capacity can be matched with commercial opportunities that create additional value.

Multiple Layers of Value

The most interesting aspect of the example above is that it demonstrates two different opportunities from the same customer. The first comes from securing part of the customer's recurring baseload requirement. The second comes from responding to changes in that customer's short-term demand.

The power of this ecosystem is that consumers can match their demands across multiple generators; and generators can match with multiple consumers. This creates a fluid market, optimising efficiency and pricing for all participants.

P2P is not simply about selling electricity: it is about creating additional ways for existing commercial teams to capture value from generation assets.

The Key Takeaway

The most important idea in this article is simple: Additional value is created by matching different types of generation with different types of demand.

Some opportunities arise from predictable baseload requirements. Others emerge from short-term changes in demand.

The more premium-priced options commercial teams have available, the more effectively they can allocate generation to maximise overall portfolio value.

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