The energy market is under transition towards becoming more flexible. As in all markets change creates uncertainties for stakeholders, including investors. Even though there is more green capital than ever, still there is a gap between investors and project owners because of these uncertainties. One of the core objectives of the Horizon 2020 project FlexiGrid is to develop financial instruments to close that gap.
Our energy systems need more flexibility in order to open up for more renewable energy, but there is a huge challenge for deployment of the flexibility. New business models are needed and there are plenty of regulatory barriers and policy issues that need to be addressed. But at the core lies also the gap between the very much existing capital that is needed for these flexible concepts of business models and technology to be rolled out in full scale. These new markets are breaking new grounds, and there is an obvious hesitation from the financial side.
FlexiGrid develops financial instruments
FlexiGrid is a Horizon 2020-project, executed by 16 partners from 8 European countries. The aim is to provide distribution system operators, the DSOs, with a variety of advanced tools to meet new demands for the transition into fossil-free energy brings while remaining the lead actors on this changing market. One of the key elements are the financial instruments.
“What is hard regarding flexible markets is that it is unknown for investors and new to those who are developing the markets. It is hard to evaluate risks for the investment. And even if the ones who are rolling out the system don’t think there is a risk, it is still an unconventional issue getting investments to develop flexible markets”, says Magnus Andersson, FlexiGrid’s expert on financial instruments.
An exciting market
There is a lack of knowledge on the investors side in this issue and FlexiGrid is working on creating an understanding for the concepts. The Horizon 2020 project moves forward interviewing need owners and investors with the purpose of building knowledge useful for any actor trying to succeed within the new flexible markets.
“It is an extremely exciting market for the moment. The capital has moved towards green investments, looking for good projects to invest in. There is a lot of capital with this purpose, and it is cheap.”, says Magnus Andersson.
In FlexiGrid the financial instruments are developed in cooperation with the partner DSOs and real estate owners, with the purpose to deliver a financial instrument service for any actor in the flexible energy market.