Czech Republic’s first corporate renewable energy PPA signed

Prague saw the signing of the first-ever corporate PPA (Power Purchase Agreement – a contract for the long-term purchase of electricity) in the Czech Republic on 22 July this year. Representatives of Ambient Energy (the supplier) and ŠKO-ENERGO (the offtaker) signed the long-term electricity purchase agreement. Micronix Group will deliver the wind farm from which the green electricity will be sourced.

The PPA market

The market for PPAs is growing rapidly. Last year, despite the pandemic, it grew by 18 % to 23,7 GW. The US is the largest market for corporate PPAs. However, significant growth was also recorded in Europe last year, particularly in Spain, due to favourable conditions there for renewable energy sources.

Corporate PPAs enable companies to purchase electricity generated from renewable sources, such as photovoltaic (PV) plants or wind power plants, directly from private suppliers/producers and specific facilities. By signing such an agreement, the electricity offtaker secures long-term fixed electricity costs and reduces its carbon footprint. The producer, in turn, has certainty over the electricity price set by the contract for the agreed period.

Aurora Energy Research, for example, predicts a strong future for PPAs, stating that demand for PPAs in Germany will exceed supply by 2030.

Similar developments may also occur in the Czech Republic given the configuration of the operating support scheme. On the day when the European Commission presented its package of measures entitled “Fit for 55”, aimed at increasing the share of renewables in electricity generation and reducing greenhouse gas emissions, Czech MPs rejected in the third reading of an amendment to the Act on Supported Energy Sources the option of auction-based support for new PV plants. Given variable electricity prices, this could jeopardise some PV projects. The above-mentioned PPAs offer a solution, enabling producers to obtain financing for their projects more easily.

The first corporate PPA in the Czech Republic

Representatives of ŠKO-ENERGO, which supplies energy to ŠKODA AUTO and heat to Mladá Boleslav, signed a 20-year contract with representatives of Ambient Energy, which specialises in purchasing and selling electricity from renewable energy sources, valued at more than 1 billion Kč.

“For ŠKO-ENERGO, environmental protection has always been a key issue. We believe that, in line with our plans and strategy, as well as the strategy of our main customer, ŠKODA AUTO, we will fulfil our commitment to become carbon-neutral in electricity and heat generation. We are targeting renewable energy sources and seeking to diversify them,” says Ing. Tomáš Kubín, Managing Director of ŠKO-ENERGO.

According to the plan, a new wind farm comprising a total of 4 wind turbines will be built near the municipalities of Moravice and Melč in the Opava region during 2023. Annual electricity generation from the wind farm is forecast at 26,3 GWh.

“We are very proud to have concluded a deal that will enable a major new environmentally friendly electricity source to be built without state subsidies. We are all the more proud because the long-term offtaker of this electricity is none other than ŠKO-ENERGO, a subsidiary of ŠKODA AUTO. PPA deals are one of the ways towards decentralising the energy sector and developing renewable sources. They work very well, for example, in the United States and could also be successful in the Czech Republic,” said Ladislav Seidler, Director of Ambient Energy.