To support the development of a RES project requires a critical mass which can and should absorb the energy produced by it. This critical mass must be grouped and entered the green bilateral contracts (corporate PPAs) that are constantly gaining ground in the European and international electricity market.
This critical mass is large and small companies in every sector of the economy, universities, municipalities, government agencies and consumers.
What are Green PPAs?
Τα συμβόλαια PPA (Power Purchase Agreements) is a contract between the corporate buyer and the power producer to purchase electricity at pre-agreed prices for pre-agreed period. The term of contract includes: the length, the delivery point / date, volume, and price.
Electricity can be supplied by existing renewable energy assets or new build projects. The benefits for corporate and other type of buyers are:
- Fixed electricity price of fixed price cap, without the necessity to deposit upfront capital.
- Advanced certainty of future electricity cost.
- Hedge against energy price volatility.
- Risk mitigation against cost of carbon.
- Operational & maintenance risk sits with producer.
- Contributes to Sustainable Development Goal 12 – Ensuring sustainable consumption and production patterns.
- Renewable energy and production patterns.
Climate change and PPAs
Green PPAs also provide a way out for high-energy industries that are burdened with disproportionate energy costs, constantly losing ground to the competition that already uses PPAs.
The shift to green PPAs internationally is a result of climate change targets that are causing radical changes in both electricity and all forms of economic activity.
RES investors to secure financing must present, closed contracts => closed revenues, for a specific long period. This is achieved through corporate PPAs. Consumers through bilateral contracts reduce the risk of price fluctuations in electricity markets.
But these contracts have more and more stock market characteristics. As companies set goals to reduce their environmental footprint, interest in PPAs will grow.
But in the main markets, PPAs are incorporating new technologies and new risks. Consumer interest has now grown and is attracting cities, universities, and government agencies. For example, the City of London recently signed a €44m 15-year contract with French company Voltalia, which is developing 49.9MW PhotoVoltaic parks in Dorset.
In the Netherlands, the Directorate-General for Public Works and Water Management recently announced the conclusion of a PPA with Eneco. RES concerns a group wind farm in the port of Rotterdam with 22 wind turbines and will power bridges, roads, and offices.
The Government of Canada has announced a call for tenders for PPA, with the aim of covering the consumption of its buildings, official vehicles, and other functions, amounting to more than 500GWh per year to achieve 100% clean energy by 2020.
The market for PPAs is maturing internationally, incorporating new RES technologies in addition to wind and photovoltaic, such as storage and renewable gases, while contracts are taking on a cross-border dimension.
