The established subsidy scheme for renewable energy in many European countries has been characterised by the payment of a given sum in Cents per kWh produced over a period of support of 15 to 20 years. However, voices in favour of cutting all future public subsidies for renewables are getting louder as the competitiveness of those technologies increases. According to this perspective, the profitability of such installations should only be dictated by supply and demand.
In this context, the market has developed models for the project development of subsidy-free renewable energy installations, using “Corporate PPAs” (Power Purchase Agreements). This has been most notable in the USA in the past few years but is now a clear upward trend in Europe as well. Some major tech companies are leading the way and are already covering a share of their electricity consumption with renewable energy sources using such schemes.
For renewable energy producers, this evolution does not only affect future projects but also current installations, as their subsidy contracts will expire at some point.
Our energy experts Dr. Markus Böhme and Carsten Bartholl give a market and legal insight into those topics with this short memorandum:“Corporate PPAs – A future financing model for renewable energies".