Wind energy PPAs on the rise

Industry Database

According to trade body Wind Europe, companies around Europe have now signed nearly 5GW of power purchase agreements (PPAs) with wind farms. This is almost equivalent to Denmark’s total wind energy capacity.

Such deals allow large corporate electricity purchasers to lock in their energy costs many years ahead. These PPAs only started in 2014 and mainly in the ICT sector to power data centres. But now other energy-intensive industries are signing them. 2018 saw 1.5GW of new PPA deals with wind farms. And the aluminium sector was the most active, with Norsk Hydro and Alcoa signing big deals in Sweden and Norway. Pharmaceuticals and automotive also did their first PPAs, with Mercedes-Benz announcing deals in Poland and Germany. The latter will see wind energy powering Mercedes’ electric vehicle and battery manufacturing.

PPAs give industry long-term energy supply at fixed-prices. Most contracts are around 15 years. Norsk Hydro’s last year was 29 years.

Nordic countries still have the most PPAs. But 2018 saw Germany, Spain and Poland all get their first PPAs. France and Italy are looking into it as well. The EU Clean Energy Package will help: it requires governments to remove outstanding regulatory barriers to PPAs.

WindEurope CEO Giles Dickson said: “Corporate PPAs are booming. Industrial consumers across a range of sectors have now bought nearly 5GW of wind energy via PPAs. 2018 saw a record number of new deals, and the first PPAs in the automotive sector and in pharmaceuticals.”

By Jake Frith

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