L R AS Published on Monday 16 October 2023 - n° 461 - Categories:purchase/sale contracts
Power purchase agreements in Europe
Contracts for the purchase of solar energy by companies are developing rapidly in Europe. Spain is the country that has developed these contracts the most. It has signed 61
between 2021 and now for a total of 2.9 GW, according to Enerdatics Energy Transition. France comes second, with 23 contracts signed totalling 1.4 GW.
26 German companies have signed supply contracts for 1.1 GW over three years. In Poland, 15 companies have signed contracts worth 0.9 GW. In the United Kingdom, 31 companies signed contracts for 0.5 GW.
Although the contracts were not signed very often at the outset (in 2021), they are tending to be signed more and more frequently because the benefits are so attractive. This is true for the supplier, who has a long-term customer for the duration of the contract; it is true for the company, which is supplied with energy for several years at a price fixed at the outset, without being subject to fluctuations in electricity prices. This advantage became particularly clear during the war in Ukraine. Companies have seen the benefits of signing up to contracts in order to lock in the price of electricity and to meet their regulatory obligations in terms of decarbonisation. The rate at which contracts were signed accelerated.
In France
French industrial companies, which are often major energy consumers, were the first to seek to lock in their energy prices. They signed up to 0.8 GW of contracts, more than half of the total. They include Renault (350 MW), SNCF (260 MW), Prony Ressources (160 MW) and Faurecia (100 MW). They have subscribed for 15 to 25 years.
Technology companies consume large quantities of energy, particularly for their data centres. These activities require a constant and substantial power supply.
The distribution sector has signed more than 200 MW of power purchase agreements in the last three years.
So far, the contracts have been signed by large companies capable of making a long-term commitment and with the financial resources to reassure the energy supplier. These agreements will only develop if they are extended to small and medium-sized businesses, which do not offer the same guarantees.
The French government is aware of the difference in treatment depending on the size of the company. The Renewable Energy Acceleration Bill provides a legal framework for the conclusion of such agreements. This framework imposes an administrative authorisation on producers wishing to sell electricity and opens up the possibility of coupling purchasing agreements with public financial aid programmes.
The government has extended to public companies the possibility of entering into such long-term contracts, which was not previously the case, since a call for tenders had to be issued at regular intervals.
PV Magazine of 13 October 2023
