Renewables capacity in new electricity power purchase agreements quadruples in Germany
Clean Energy Wire
The number of power purchase agreements (PPAs) in Germany grew by 323 percent in 2023 compared to the previous year, according to a market analysis by the country's energy agency (dena). PPAs, which are long-term electricity supply agreements between two parties, saw the biggest growth in the solar and offshore wind segments, with dena noting they are a key element in the energy transition. "PPAs must also play an important role in the future electricity market in order to further incentivise the competitive expansion of renewable energy," said dena head Corinna Enders in a statement.
Corporate PPAs were the biggest driver of market growth, according to the analysis. That was partly down to a recent EU directive requiring more companies to report on their environmental, social and governance standards, which in turn increased pressure to find ways for businesses to decarbonise their activities, dena reported. New EU rules around green hydrogen also pushed electrolyser operators in Germany to conclude more PPAs for the production of renewable energy.
Renewable PPAs are direct contracts between consumers and electricity suppliers. They ensure that electricity is sold on a long-term basis (typically between 5-15 years) at an agreed price. By providing renewable energy suppliers with predictable revenues and lowering their financial risk and capital costs, PPAs could increase the share of renewables in electricity generation. Germany is now the second largest PPA market in Europe behind Spain, according to dena.
