The first day of the RE-Source Southeast Conference in Sofia, Bulgaria, this week underscored European and regional interest in renewable-energy projects based on corporate power purchase agreements (PPAs). Negative or very low electricity prices in European electricity markets affect the appetite for such projects, but the solution for investors and policymakers is to approach the issue systematically.

Ilias Tsagas ↗

Image: pv magazine, Ilias Tsagas

SolarPower Europe Director for Business Development Daniel Dang said this week at the RE-Source Southeast Conference in Sofia that there were a record number of renewable energy projects in Europe last year, amounting to more than 10 GW of capacity under corporate PPAs. Spain and Germany are taking the lead in this segment of the market, but the United Kingdom and France are also getting strong on this front. Projects are growing in number and in terms of innovation and maturity, added Dang.

There are now multiple-buyer PPAs, or PPA contracts with energy storage and power generation, he said, noting that the European Union’s recently approved new electricity market design prioritizes corporate PPAs. One example of how the new European electricity market design fosters corporate PPAs is by allowing projects that combine remuneration support via contracts for difference (CfD) and PPAs, argued Dang. 

However, a key problem for the corporate PPA segment is the regular appearance of negative or very low energy prices in the continent’s power markets, noted several conference speakers. 

The region needs to stop thinking of the energy markets as if they are casinos, argued Dimitar Bartov, managing director of Sofia-based utility Synergon Energy. The past few years have been a rollercoaster, he said. The pandemic sent power prices downwards, while Russia’s war in Ukraine caused power prices to skyrocket. However, developers and utilities need to meet with clients and discuss this issue, as well as their clients’ electricity profiles, he added. 

Nevertheless, Southeastern Europe does not have many large or multinational corporations that will sign 10-year PPAs. Developers often need to offer shorter PPAs for mid-size companies, added Bartov. 

However, Kamaryt said that there are so many different PPAs in the region that are driven by legislative differences between countries.

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There is no a single solution to this volatility, said Dang. Both investors and policymakers need to systematically think about the volatility issue.

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