Germany’s market for solar power purchase agreements (PPAs) has witnessed the signing of one of the first sizeable deals of the year, featuring one of Europe’s largest telecommunications firms.
Deutsche Telekom has agreed to become the offtaker for a 60MW PV project Vattenfall will be sponsoring in Germany’s northeast, the utility said in a statement this week.
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The installation, planned in the German state of Mecklenburg-Western Pomerania, should be up and running in mid-2021 and will supply PV power to Deutsche Telekom under a 10-year PPA.
Under the agreement, the electricity will be specifically sold to Deutsche Telekom subsidiary Power & Air Solutions, specialised in the maintenance of IT infrastructure.
For Vattenfall, the solar push in Germany follows the launch last June of its first ever green bond raise, which saw €500 million (US$542 million) issued for the utility to invest in renewable projects.
Across the border in the Netherlands, the Swedish firm is working on a solar-plus-wind-plus-storage hybrid as well as a 1.2MW floating PV plant, its first such development anywhere.
The €2bn PPA opportunity of Europe’s top PV market
The Vattenfall-Deutsche Telekom deal adds to the steadily growing list of PPA and subsidy-free solar moves in Germany.
At around 50GW in installed capacity, the country remains Europe’s largest PV market by far but has been slower than Spain and others in embracing the free-market approach.
Deals of note emerging so far include a subsidy-free partnership by THEE-CEE (500MW) and EnBW’s zero-subsidy project (175MW), as well as schemes by BayWa r.e. (8.8MW) and SEAC (1.5MW).
At present, the country still uses subsidies as it works towards a target, set last year, to take installed PV capacity to 98GW by 2030. The latest PV auctions have resulted in vast oversubscription.
However, some analysts believe the country could become a hotspot for renewable PPAs if it acts to de-risk these deals, unlocking a €2 billion (US$2.25 billion) market in the process.
As it announced the PPA this week, Vattenfall acknowledged PPA uptake in Germany remains some way behind other European markets, including the Nordics.
“Vattenfall's goal is to become one of the leading [PPA] providers in northwest Europe,” said the firm, a hydro power giant owned by the Swedish state and headquartered just outside Stockholm.
The prospects and challenges of solar's new era in Germany and the rest of Europe will take centre stage at Large Scale Solar Europe 2020 (Lisbon, on 31 March-1 April 2020).