PPA The megatrend
Axpo is at the forefront of the international PPA business, offering tailored on-site and off-site PPA solutions for green electricity procurement to meet the specific requirements of our customers.
As the demand for 100% renewable energy increases, industrial customers are increasingly adopting this standard way of financing. Long-term power purchase agreements (PPAs) have emerged as a crucial area to support the energy transition in the renewable energy sector. Following the reduction or elimination altogether of state subsidies and sharply falling production costs for new renewable power plants, PPAs for renewable energies have become a megatrend in many parts of Europe. These agreements enable the development of new green electricity generation without relying on subsidies, help power the energy transition, and support the fight against climate change.
Axpo leverages its know-how, mediating between Investors and producers and a growing number of industrial companies seeking electricity in line with their sustainability strategies.Domenico De Luca, Head of Trading & Sales at Axpo
With over 15 years of experience, Axpo has deep expertise in PPAs, enabling corporate customers to effectively reduce their CO2 emissions. Our strong presence across 40 markets in Europe, the USA, and Asia positions us as a leader in the international PPA industry.
The European Green Deal wants to make Europe the first climate neutral continent in the world by 2050. In order to get there, the EU is working on the Fit-for-55 package, which aims to reduce Greenhouse gas emissions by 55% by 2030 and increase the share of renewables from 32% by 2030 to 42.5% - Should the revision of the Renewable Energy Directive be adopted, it will trigger a huge demand for the new-build of renewable power production.
What you need to know about PPAs
We offer on-site and off-site PPA solutions in the field of green electricity procurement for major customers, depending on their needs. If you have a free market access (consumption >100 MWh), Axpo can offer the following options:
On-site solutions
- Procurement of renewable energy and reduction of the CO2 footprint through lower emissions.
- Enhance your brand through its alignment as a sustainable industrial company.
- Good plant visibility because it is on-site.
- Risk management against volatile and/or rising electricity prices without prior capital requirement.
- Benefit from either a lower electricity price or a return on investment as there are no grid costs. On-site PPAs are an ideal complement to off-site PPA procurement models.
The customer obtains the electricity generated from the renewable plant himself. Although the customer has to finance the plant, he saves electricity and grid costs in comparison to buying electricity from the supplier. Any surplus production and residual purchases are accepted or delivered by Axpo.
The customer obtains the electricity generated from the renewable plant himself and does not have to finance the plant, because Axpo or a third party takes over. Instead, he pays a regular leasing fee, but saves on electricity and grid costs in comparison to buying electricity from the supplier. At the end of the leasing contract, the plant is transferred to the customer. Any surplus production and residual purchases are accepted or delivered by Axpo.
The customer purchases the electricity generated from the renewable plant himself and does not have to finance the plant, because Axpo or a third party invests in the plant. Instead, the customer pays a fixed long-term PPA price for the electricity, thus saving electricity and grid costs compared to purchasing electricity from the supplier. The plant remains in the possession of the investor. Any surplus production and residual purchases are accepted or delivered by Axpo.
Off-site solutions
- Procurement of renewable energy and reduction of the CO2 footprint through lower emissions.
- Enhance your brand through its alignment as a sustainable industrial company.
- Risk management against volatile and/or rising electricity prices without prior capital requirement.
- Procurement from any location, use of projects in more profitable regions (such as wind power from Nordic countries, PV from Southern Europe or Swiss hydropower).
In a physical PPA, the electricity is fed into the Swiss or European grid. Axpo physically supplies the customer with the corresponding quantities at the respective PPA price.
In a virtual PPA, also known as a financial PPA, the customer and Axpo agree a PPA price. In addition, the customer has a physical supply contract with a supplier of his choice. At the end of each month, Axpo and the customer each settle the difference between the agreed PPA price and the spot market price (Contract for Differences CfD).
