Researchers: Germany missing out on €2bn renewable PPA market

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on reddit
Reddit
Share on email
Email
Subsidy-free projects have been slower in coming in Germany, which is nearing the point where FiTs would need to be halted (Credit: Baywa r.e.)

A bolder embrace of renewable PPAs could help Germany unlock a €2 billion (US$2.25 billion) market and greatly benefit its businesses and citizens, according to consultants.

The EU’s biggest economy could fuel progress towards renewable targets and cover 13% (51TWh) of its commercial power demand via solar and wind PPAs if it acts to de-risk these deals, Aurora Energy Research said this week.

PPAs, Aurora said, represent a cost-mitigating clean energy route in Germany, which under Energiewende goals must push its nation-wide renewable share from 15.9% of final consumption in 2017 to 30% in 2030 and 60% in 2050.

According to the firm, coal phase-outs and tumbling renewable costs are whetting the PPA appetite of utilities and corporates. However, Aurora added, the potential remains largely untapped as bankability issues make PPAs too costly an option for some.

A state guarantee – much like Germany’s export credit cover – would particularly help smaller businesses with low credit ratings, said Peter Baum, who authored Aurora’s study. As things stand, he added, costs can be so high that PPA’s economic viability is “in question”.

Life beyond FiT success

Easing renewable PPA uptake has become, in recent times, a legally-binding endeavour for Germany. This year’s final passing of the EU Clean Energy Package requires the country, along with all other EU member states, to work to identify and bring down obstacles to these deals.

Despite the legal obligation, countries were recently scolded over their supposed inaction on the PPA front. Only this week, a coalition of renewable lobbies and corporate giants urged the European Commission to call member states to task when it responds to draft national plans, later this summer.

Pending government intervention, deployment of solar corporate PPAs remains muted in Germany. According to BNEF stats, not a single such deal was inked last year, contrasting with volumes recorded in the US (4.3GW), Australia (686MW), the UK (182MW), Spain (43MW) and Italy (26MW).

At 46GW last year, the country has used feed-in tariffs (FiT) to build the EU’s largest PV sector but is now nearing the legal threshold where subsidies would need to be halted. Subsidy-free deals have been slower in coming than in Spain and others. 

Speaking to PV Tech in April, Bird & Bird counsel Lars Kyrberg said German operators are “warming up” to corporate PPAs despite the “minor barriers”, including whether these deals are legally compatible with FiT support.

Read Next

April 15, 2021
Hamburg-based solar operator Blue Elephant Energy has joined forces with renewables developer Umweltgerechte Kraftanlagen (UKA) to develop a 500MWp solar portfolio in Germany.
April 14, 2021
Meyer Burger is on track to start shipments of its first heterojunction (HJ) solar modules made in Germany to distributors in July.
April 13, 2021
As energy markets continue to adapt and grow, energy arbitrage could overtake frequency markets as a key revenue stream for many co-located solar plus storage projects.
April 8, 2021
Green hydrogen may become cheaper than natural gas by 2050, falling by 85% over the next 30 years, but declining costs in the solar sector will be crucial for the nascent technology's growth.
April 1, 2021
As the solar industry has matured and sustainable investment has moved up on the global market’s list of priorities, power purchase agreements (PPAs) have become a mutually beneficial arrangement between developers and the corporate world. But SMEs have remained difficult to cater for in comparison to larger, more bankable offtakers or utilities with permanent facilities. Edith Hancock explores how this might be changing.
March 31, 2021
Renewables investor Cubico Sustainable Investments has completed its acquisition of a European 272MW solar power platform called Grupo T-Solar from I Squared Capital.

Subscribe to Newsletter

Upcoming Events

Solar Media Events
April 20, 2021
Upcoming Webinars
April 28, 2021
4:00 - 4:30 PM CET
Solar Media Events
May 11, 2021