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PPA’s have potential aplenty if opportunity can be unlocked

Thu 12 Oct 2017 by David Foxwell

PPA’s have potential aplenty if opportunity can be unlocked
PPAs from huge companies such as Google, Mars and Ikea can reduce emissions and drive demand for green energy

Renewable energy bodies including Wind Europe say the EU’s Clean Energy Package could herald steep growth in demand for green power in the private sector.

The private sector accounts for around half of Europe’s electricity consumption, and providing corporate consumers with renewable energy could deliver a massive reduction in CO2 emissions, according to Wind Europe. It could also save businesses money and make it easier for people to invest in renewables. 

Large energy consumers such as chemical and aluminium producers, ICT and food and drink companies gathered in Brussels this week with renewable energy producers to consider how to unlock this potential. The RE-Source 2017 event brought together industry leaders such as Google, Mars, Ikea and Alcoa with energy players EDF Energies Nouvelles, ENEL Green Power, Envision and Vestas with policymakers. 

The volume of corporate renewable Power Purchase Agreements (PPAs) – which allow companies to purchase renewable energy directly from an energy generator – almost tripled in Europe in 2016, with over 1 GW of capacity contracted.

Globally, more than 100 top companies have committed to procure 100% renewable electricity via the RE100 initiative, together accounting for 150 TWh of yearly consumption. However, in Europe, only a limited number of large corporates are involved in renewables sourcing and do so in only a handful of European countries, mainly Scandinavia and the UK.

Getting the EU’s Clean Energy Package right will be key to unlocking the massive growth potential of PPAs, Wind Europe says. Companies wanting zero-carbon power need to trace the supply and prove that it's renewable. They also need to value additionality criteria if they have been explicitly investing in new RES capacities, therefore contributing to the achievement of EU’s overall targets.

To do this they need functioning Guarantees of Origin that are effectively linked with RES producers and a system that values investments in additional renewable capacities. The European Commission’s proposal for a Renewable Energy Directive is insufficient in this regard, and this must be tackled by the European Parliament and Council in the next phase of the negotiations.

In many countries, including Germany, it is a grey area as to whether the law actually allows for PPAs. The new Renewables Directive would require governments to remove legal barriers to PPAs. A better legal framework would help PPAs spread into other markets, while more flexible contracts catering to the needs of SMEs would enable PPAs to flourish beyond the major corporates.

WindEurope chief executive, Giles Dickson said “Wind energy producers can supply cheap power today thanks to significant reductions in technology and operating costs in recent years. Renewable PPAs help companies source the affordable power they want and at fixed prices reducing their exposure to volatile fossil fuel costs. But there are still barriers to PPAs. The Clean Energy Package is an opportunity to remove these and ensure PPAs can really flourish.”

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