04/27/2023
Source: Energy & Management Powernews
For a long time, green project developers and large corporations made up the PPA business among themselves. But some municipal corporations are also stirring. For various reasons.
Climate neutrality also applies to industry and commerce in Germany until 2045. But it may become necessary sooner, if, for example, suppliers are bound to buyers who pursue more ambitious plans. In that case, they too will have to convert their production accordingly and quickly. When it comes to purchasing green electricity, direct supply contracts (PPAs, Power Purchase Agreements) are particularly easy to communicate because of their reference to specific generation parks and the co-delivery of certificates of origin. In addition, their long terms compared to EEG direct marketing give companies price certainty.
Suppliers in industry in particular are dependent on the Net Zero strategies of their main customers. Take Schneider Electric, for example: the French global corporation and market leader in medium-voltage systems wants to have climate-neutral production by 2030. Its own plants are already being converted to renewable energies, for example with huge PV systems on the roofs of the production halls (Scope 1). But the components that are installed in these halls must also be produced in a climate-neutral manner - so this will become mandatory for suppliers (Scope 2). Schneider Electric expects each of them to comply with all 49 ESG criteria (environmental, social, good governance).
Not everyone, however, will have the financial means, much less the space, to produce green energy themselves. Only PPAs and other supply contracts for green power (and, of course, for green process heat) that rely on outside energy sources will help. Meanwhile, the availability of green energy is the number one reason for companies to locate here. On the seller side, PPAs have been and continue to be the domain of pure-play renewable companies and large energy companies.
Part of a cascade of PPAs will be Korean solar module manufacturer Hanwha Qcells: project developer Juwi will sell an 8.4 MW solar farm in Donnersbergkreis (Rhineland-Palatinate) to Hanwha Qcells after construction is completed, but will retain technical and commercial management. From late summer onwards, Hanwha Qcells will pass on the electricity generated to its customers - not only via PPA, but also in power contracting and plant lease and purchase models with installment payment options. The PV project is not subsidized by the EEG. The approximately 17,000 modules come from Qcell's own production. "By purchasing the solar park and the closed PPA, we can use the generated clean electricity for our own balancing group and make it available to our private as well as commercial end customers in the long term and at low cost," with these words Ivan Nicolas Garcia Hergueta, Head of B2B DES Distributed Energy Solutions at Qcells, explains the motives.
RWE, in turn, commissioned three wind turbines with a total installed capacity of 7.5 MW in September 2022 on the Oosterpolder dyke in Eemshaven, the Netherlands, at the mouth of the Ems River. The electricity will be sold directly to ASML, the world's largest supplier of lithography systems for the semiconductor industry, via a PPA.
The RWE offshore wind farms "Nordsee Ost" and "Amrumbank West" will also supply electricity by PPA to eleven German industrial customers and a major municipal utility - including Badische Stahlwerke, Bosch, the Freudenberg Group, Infraserv Höchst, Mainova Frankfurt am Main, Messer, Schott, Vodafone, Telefonica, Verallia, Wacker and ZF - from 2025 and 2026, respectively, once EEG subsidies expire.
Onshore, one- to two-year PPAs have been common for de-subsidized wind turbines until electricity revenue capture dissolved the short-term market. Eight to 10 years is common for new ground-mounted PV and 10 to 15 years for new offshore wind farms. Customers receive direct offtake ("as produced"), schedule delivery with wind farm profile ("as nominated"), or structuring to a constant power delivery quantity (band delivery), depending on their preference.
RWE was a pioneer in PPAs from old wind farms: since 2019, electricity volumes from the two offshore plants have been sold to Deutsche Bahn via PPA. Both wind farms have been providing green electricity around 60 kilometers off the German North Sea coast since 2015. The 128 wind turbines in total have a capacity of almost 600 MW.
"The great interest shown by our customers in these power supply contracts underscores the importance of CO2-free electricity for German industry. We are preparing the marketing of further offshore electricity from parks under development," explains Ulf Kerstin, CCO of RWE Supply & Trading.
Municipal utilities are getting a taste
The first municipal energy suppliers are entering the PPA domain: Mannheim-based MVV Trading, for example, whose parent company MVV AG once bought up and merged project developers Juwi and Windwärts, is now one of the six direct marketers with more than 1000 MW in other (subsidy-free) direct marketing including PPA in the current E&M direct marketing survey for 2022 as a whole. In the 200 to 500 MW class, Stadtwerke München, Nuremberg-based N-Ergie and the municipal cooperation Trianel are found alongside green companies such as Naturstrom.
The reasons for this are manifold, in addition to customer demand: their own municipality requires their utilities to switch to renewables and achieve climate neutrality well ahead of the statutory national date of 2045 or the EU net-zero target for 2050. In addition, municipal utilities have always held varying degrees of economic development mandates. And for industrial customers, the availability of sustainably generated energy is now the main criterion for locating. The Northern Chamber of Commerce, based in Germany's windiest region, launched a relocation campaign: "Come to where the power is!"
There are a few examples of community-based PPA involvement: At Verdion Expo Park, a 46,700-square-meter logistics center on the former Expo site, Hannover-based Enercity built what is currently the largest rooftop photovoltaic system in the region, with nearly 4.7 MW and 11,400 modules, in fall 2022. Sparkasse Hannover secured half of the expected annual electricity production of 4 million kWh since January 1, 2023. The investment amounted to 3.5 million euros (see also brief interview with Enercity CEO Susanna Zapreva).
N-Ergie, the supplier for Nuremberg, commissioned two solar plants with 64,000 modules and a total of 29 MW in the district of Kitzingen in 2022. 22 MW of these are not remunerated according to the EEG, but are sold by PPA as part of "other direct marketing" with proof of origin.
Regional PPA alliance
N-Ergie joined forces with Erlanger Stadtwerke (ESTW), Infra Fürth, Stadtwerke Schwabach and Stein, and Gemeindewerke Wendelstein (district of Roth) to form "Ökostrom Franken" in October 2021. The aim is to further expand photovoltaics in the region.
A first plant went with 6,2 MW in Röthlein (circle Schweinfurt) to the net. The customers are the combined municipal utilities themselves. So they make their own PPAs as producers of and buyers for green power. One of the declared goals: The municipal utilities secure access to increasingly demanded regional and certified CO2-free electricity.
Author: Frank Urbansky
Accessibility
Language
