How PPAs are driving an evolution of Italy’s PV market
Long-term Power Purchase Agreements (PPA) contracts for the purchase of renewable energy are becoming an essential component of Italy’s energy transition. By 2030, it is forecast that Italy’s solar capacity will reach 36 GW, and much of this growth will be underpinned by PPAs, which allow SMEs and multinational companies to obtain renewable energy at a competitive price over a long timescale. This serves to provide vital financial certainty and security to renewable energy suppliers.
Globally, some 7.2 GW of green energy has been installed via the mechanism of Corporate PPAs. Of that figure, 1.4 GW stems from material companies, and 1.8 GW has been installed by technological companies.
The total number of companies participating in the RE-Source Platform – the first multi-stakeholder European platform for renewable energy – committed to switching to 100% renewable energy currently stands at 154.
Implementing decrees still at draft stage
The implementing FER decrees are still at the draft stage, but provide for the need to create a trading platform for long-term PPAs that regulated by Italy’s Energy Market Operator (GME). The FER will also have a reference contractual framework defined by the Regulatory Authority for Energy Networks and Environment (ARERA) for long-term purchase contracts.
Two noteworthy examples currently
Currently, there are two noteworthy cases in Italy. The first is in the C&I segment and concerns an existing 3 MW PV plant complete with a FIT between Engie Italia S.p.a and Wienerberger S.p.a – two entities that have signed a five-year contract with a price applied for the entire duration of the contract. The second, meanwhile, is in the utility scale sector and concerns a new 40 MW PV plant in Sardinia built at market parity with a five-year agreement between Octopus Investments Ltd and EGO Trade S.p.a.
In the next three years, the potential of the Italian PV grid market is estimated to reach 4 GW, split between the C&I and utility-scale sector, which means that we should see from next year PV projects sized between 5-50 MW completed with different contract formulas ranging from 5 to 10 years, depending on type.
The Italian solar industry expects that the PPA market will gain maturity over the next two years as it expands through the diffusion of small PPAs and the launch of more online trading platforms.
15 to 20 years contracts currently not yet possible
Contracts in the range of 15 to 20 years are currently not yet possible because the Italian market does not offer adequate hedging instruments, and end customers are not yet ready to buy green energy – with stable and secure prices – fixed in the long term.
It must be said, however, that credit insurance can be stipulated so that the reliability and solvency of the private individual who buys the energy is guaranteed.
I hope that with the new FER decree coming out over the next few months, large Italian companies, but also SMEs, can choose to feed their production plants and offices with 100% renewable, stable, economic and certified renewable energy through the dissemination of long-term purchase.
The goal of accelerating renewable investments in Italy concerns the entire PV supply chain, which is why Hanwha Q Cells has always focused on reducing the costs of solar technology, and increasing yield, performance and reliability by investing in continuous product innovation.
Making solar PV an economic and competitive technology has ensured that the production of energy from large-scale PV systems is one of the most competitive in Italy today. (HCN/AN)
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