Corporate demand for clean electricity is more than ever at the center of global attention. Due to the energy crisis, electricity prices in 2022 skyrocketed, which caused a multiple increase in the operating costs of companies and corporations.
They looked for a way out in PPA-corporate contracts for the purchase of clean, renewable electricity directly from producers. In this way, a fixed price of renewable energy is contracted for a period of five to twenty years. With the security of a multi-year supply of electricity, it is easier for companies to plan annual costs, and the desire to purchase clean electricity directly from producers in the European Union has resulted in the contracted 6.6 GW via PPA contracts in 2022, reportsWindEurope.
The list of countries that contracted the most renewable energy through PPA last year is led by Spain with 17.4 percent, followed by Great Britain with 14.4%, Ireland with 14% and France with 12.2%. A share of less than 10 percent in 2022 was achieved by Germany, Finland, Denmark, Sweden, Belgium and the Netherlands.
Croatia is on the list for the first time
Corporate contracts for the purchase of renewable energy are becoming increasingly popular in our country as well. Last year, a multi-year purchase of green energy was contracted in Croatia through a PPA, and for the first time Croatia was included in the statistical data regularly analyzed and published by WindEurope.
Annual and cumulative review of PPA contracts
The demand for solar energy is growing
Analysis of last year’s PPA contracts shows that wind energy dominated the volumes of contracted megawatts. But 2022 shows a slightly different picture. Although the most contracts are still signed for wind energy, about 3.5 GW, an increase in demand for solar energy is visible. The analysis shows that fewer contracts were signed in 2022 than in 2021.
One of the reasons is the energy crisis triggered by the war in Ukraine and the rise in energy prices. The high rise in electricity prices prompted the European Union to adopt the Decree on emergency intervention to solve the issue of high electricity prices, which Croatia is also implementing.
The Regulation prescribes that the market revenues of producers generated by the production of electricity from wind energy, solar energy, geothermal energy, hydropower without accumulation, fuel from biomass, except for biomethane, waste, nuclear energy, lignite, oil derivatives and peat, are limited to an upper price limit of 180 euros per MWh of electricity produced.
This regulation could have an unintended negative impact on the power purchase agreement (PPA) market, as it allows member states to deviate from the revenue ceiling and thus potentially distort the energy and renewable energy markets. Energy companies developed new projects with the generated revenues, on which the EU imposes an upper limit, so the Regulation could stop investments in the RES sector. It is therefore crucial, says the RE-Source Platform, that member states exempt corporate PPAs from the revenue cap to ensure that the future growth of the renewable PPA market is not harmed.
Contracted megawatts in EU countries
The largest number of contracted megawatts of renewable energy is in Spain, and among the 5,220 MW, the largest share is solar energy. Sweden is in second place with contracted 3,403 MW of renewable energy. In this Scandinavian country, the most contracts were for the purchase of wind energy. In Croatia, according to a report by WindEurope based on publicly available data, the purchase of 19 MW of wind energy has been contracted. Below Croatia on this list are Bulgaria, Austria and Switzerland.
The company Amazon has long been at the top of the list of corporations that purchase large amounts of renewable energy.
From 2007 to today, 25.9 renewable gigawatts in PPA contracts
WindEurope has been conducting research on PPA contracts since 2007. According to the available data, almost 26 GW of renewable energy have been contracted in the European Union since 2007. In the same period and on this list, in terms of the volume of contracted PPA contracts, Spain is in first place.
