PPAs have significant benefits: they enable European companies to procure clean energy at competitive and predictable prices. They increase companies’ energy autonomy and security. They help accelerate the roll-out of much-needed renewables. In short: PPAs can be a key driver of the EU’s Clean Industrial Deal.
However, the EU’s institutions must have a consistent and supportive approach to PPAs to facilitate these benefits. The EU must build-in incentives across all EU policies for corporates to sign PPAs and other procurement tools.
EU regulation draft for EV batteries as risk
Despite the recently adopted EU Electricity Market Design revision, which mandates Member States to promote PPAs, the European Commission is currently undermining the sustainable growth of PPAs. The Commission is drafting rules to determine the carbon footprint of Electric Vehicle batteries which would ban the use of PPAs and green energy certificates to demonstrate reduced emissions.
Also see: RE-Source 2024 offers energy buyer-supplier match meetings
“With this approach, the EU would be giving with one hand and taking with the other by promoting PPAs in one policy, and building in disincentives in another. This is hugely problematic as we know that the EV battery rules will be copy-pasted for other policies.“
„The incoming European Commissioners have been instructed by the Commission President to draw on Draghi’s report in their work – this includes his recommendation to promote PPAs as a tool for industrial competitiveness. Dan Jørgensen, the Commissioner-Designate for Energy & Housing has also been instructed to unlock private financing. PPAs tick this box”, commented Annie Scanlan, RE-Source Platform’s Director.
10.7 GW PPAs already signed this year
2024 is set to become another record year for the European PPA market, with 10.7 GW signed already this year. Europe needs to accelerate this positive advancement in the energy transition. Corporates stand ready to finance new wind and solar assets – for the benefit of all society. Give them the policy framework which will help them do more, not less!
Fortunately, the methodology for the carbon footprint of EV batteries is still in a drafting phase – meaning the EU can still act to stop this hugely damaging approach to PPAs being set in EU law.
Also see: Joachim Goldbeck: “Negative electricity prices are a bad fit with PPAs”
PPAs, alongside green energy certificates, are part of many critical EU energy decarbonisation policies, therefore a consistent and supportive approach is critical to support PPAs, as a route to market for new wind and solar which uses private financing for the transition to net zero. An ambitious regulatory framework in the EU will spur renewables development globally, given that imported products would also have to follow these rules. (hcn)
