Evaluating the Profitability of an Offshore Wind Park in NO2

Mitigating Investment Risk

When investing in renewable assets in Europe, investors must look at a number of risk factors, including the cannibalization effect of other wind producers in the same price area. Volt Power Analytics has assisted one of our clients with estimating potential income looking towards 2050 for an offshore wind park in Southern Norway. At the start of the client journey, we start by presenting and explaining our in-house assumptions for relevant power market areas in Europe (e.g. the price area where the asset will lie and the adjoining areas) and translate this into forecasts through our power market model. We also present the main drivers in the Nordic market and common challenges associated with entering the Nordic market. 

Key Value Points: 

  1. Tailormade price forecasts in hourly resolution until 2050 showing the weather risk through 30 unique weather scenarios. These price forecasts are also used to calculate capture prices and rates for a specific asset and generic for the price area.  
  2. Setting the investment case’s profitability in the context of the power market, price volatility risk and expected developments towards 2050 through tailormade analysis. 
  3. Insight into fair PPA prices and fallacies with different hedging strategies. 

How We Created Value

When diving deeper into the investment analysis, Volt Power Analytics investigated the effect of the overall level of renewable generation in the price area and adjoining price areas on the profitability of the new project. This is done through a site-specific capture cost analysis using our in-house state-of-the-art power market model, producing forecasts for power prices, production, consumption and interconnector flows for all price areas in the Nordics, Northern Europe and Great Britain.  

Investors looking into offshore wind off the coast of Southern Norway can also use Volt’s simulations to evaluate the site profitability. Furthermore, Volt Power Analytic’s simulation results and long-term price forecasts covering up to 2050 in hourly resolution can be used to evaluate different tailormade scenarios (e.g. altering the renewable capacity development, checking the sensitivity to gas prices), giving our clients insight they need to make strategic decisions. 

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