Corporate PPA : the right solution to become “green”
How to reconcile “responsible purchasing” and viable financial strategy? This is the question that more and more companies are asking. To answer this question, the purchase of renewable energy becomes the #1 Solution.
Beyond the traditional sale of energy ; we observe today the rising power of a new tool, the corporate PPA (power purchase agreement). Companies are now in the same stalemate as we are: how to actively participate in the conservation of the environment ? Customers and their new consumer choices, are forcing businesses to green their business model to meet new citizen’s expectations. But how to go about it?
Reducing CO2 emissions becomes the main concern. In Europe, as in the rest of the world, the renewable energy producers have developed private contracts, called PPA. The goal for the producer is to sell direct energy to the consumer for a defined period, at a fixed or framed price negotiated when the contract is signed. In the world, these contracts mainly concern industry and companies.
For example, GAFA, such as Facebook® or Google® , already signed corporate PPA. Google has a 10 MW photovoltaic power plant to power its data center in Taiwan. The contract was formed with several Taiwanese producers.
By observing the advantages of this kind of contract, we quickly understand why GAFA are part of the primary users.
Companies can assert these contracts in their CSR approach (Corporate Social Responsibility). In vogue today, CSR becomes much more than just the good behaviour of industries. They are involved in climate regulation.
The aim is twofold: to promote the use of renewable energies and to guard against the very volatile prices of the market.
What happens in France?
A little late? Yes. France is one of the last European countries to use this kind of contract. Thanks to the framework of the additional remuneration and purchasing obligations, power producers saw no advantages in negotiating corporate PPA.
The picture changes. With the gradual abolition of purchasing obligations, producers will gradually turn to this type of direct sales contract. It was first Airport of Paris and SNCF which launched the first tenders concerning the signing of a corporate PPA.
Surprise, it is however the Boulanger group® who concluded very recently one of the first corporate PPA of France with the producer Voltalia. After the one concluded between the wind developer Eurowatt and the Metro distribution group, they become together the precursors of practice in France. The contract between Boulanger® and Voltalia will bind them for 25 years. Concretely, the company commits to buy energy from Voltalia. To do this, the producer will specifically build and operate a 5MW photovoltaic power plant (10% of the Group’s consumption).
It’s clear that corporate PPA has become a privileged tool in Europe for the use of renewable energies. 85% of the PPA concluded in Europe concern wind energy.
So even if the ENR are sometimes mocked, the corporate PPA will perhaps save them.
Corporate power purchase agreements (corporate PPAs) in the field of renewable energies in France and Germany, ofate, 2018