US packaging company Graphic Packaging International (GPI) has signed a virtual power purchase agreement (PPA) to acquire electricity generated at an 83MW solar portfolio operated by Spanish independent power producer (IPP) Zelestra.
The portfolio comprises two projects—José Cabrera and Socovos II—set to be built in Spain, and GPI will acquire around 86% of the portfolio’s total output. Once these projects are commissioned, electricity acquired from renewable energy projects will account for around 70% of the company’s total electricity supply across its European operations.
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“This agreement is a testament to Graphic Packaging’s commitment to environmental leadership and represents our largest decarbonisation lever in Europe,” said Joe Yost, executive vice president and president of international at GPI. “The long-term contract will create new green electricity capacity in Europe, supporting both our own and our customers’ commitments to reducing GHG emissions.”
PPAs are nothing new in the solar space, and the practice has seen increased attention in recent years. Figures from Swiss financial analyst Pexapark show that 2023 was a record year for the European PPA space, with 16.2GW of capacity covered by renewable power projects. Of this, 10.5GW of capacity was accounted for by solar projects, showing the importance of the solar industry to the continent’s decarbonisation goals.
However, more recent figures demonstrate a smaller appetite for new PPA deals in Europe. Pexapark notes that, across all electricity-generation technologies, developers signed deals for 944MW of capacity in June, down from 1,480MW in May and 1,550MW in April. Figures from LevelTen Energy also show that the average price of a solar PPA signed in Europe in the second quarter of this year fell by 27% compared to the previous quarter, with significant political uncertainty across Europe contributing to this disruption.
Looking ahead, analyst Wood Mackenzie expects demand for renewable power PPAs in Europe to rebound in 2024, expecting the continent to sign around 20GW of corporate PPAs. This would be in line with the record figure of 20GW set in 2021, which preceded a decline in European corporate PPA demand to 13.4GW in 2022 and 13.9GW in 2023.
The analyst expects increased demand for clean power from both the data centre sector, and the heavy industry sector, to contribute to this increase, as companies look to avoid a repeat of the spiking power prices that took place in the wake of Russia’s invasion of Ukraine.
