Worldwide boom for PPAs, Germany lags behind, study

The market for long-term power purchase agreements (PPAs) with operators of solar and wind power plants is booming in Scandinavia, Great Britain, Spain, Portugal and the USA. According to a study by Berlin-based consulting firm Aurora Energy Research, Germany is lagging behind in this segment. The existing potential is »still largely untapped«. According to the data, industry and commerce consume around 380 terawatt hours of electricity per year, of which the 200 largest German companies alone could buy a good 50 via PPAs with a volume of 51 terawatt hours, a market volume of around two billion euros. »This corresponds to between 17 and 23 GW of renewable power plant capacity. The phasing out of coal could lead to a further six to eight GW being added by the demand of large suppliers.«
In the past two years, PPAs for around 4.3 GW have been closed in Scandinavia alone, including the world's largest to date, with which the Norwegian aluminum producer Norsk Hydro is securing electricity from the Swedish 650 MW onshore wind farm »Markbygden« for 19 years. This contract alone is »more than ten times the size of all PPAs concluded in Germany during the same period combined.«
Peter Baum, author of the study, explains that the planning reliability of energy costs is of particular interest to customers because the electricity price is negotiated and fixed for the entire duration of the PPA. For electricity producers, on the other hand, PPAs offer the opportunity to operate wind power or photovoltaic plants economically without subsidies by reducing risks and thus capital costs.
However, demand is still subdued. As technology costs fall, »interest is likely to rise, especially as more and more companies want to purchase green electricity as part of the climate protection debate.« Politicians could support development with state loan guarantees.

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