Today, there are various solutions to allow an electricity consumer to obtain renewable energy and therefore to switch to green energy.

These various solutions make it possible to finance renewable energy production plants. These may be existing power plants or wind farm projects, Of solar fields, biomass cogeneration plants or hydroelectric power plants.

Two criteria are very important for a consumer who wants to consume green electricity:

• The first is the desire to consume electricity from renewable sources to participate in the energy transition: how is the origin of this electricity production or supply of electricity guaranteed?
• The second is to know where this green electricity comes from in very concrete terms: from which renewable energy producer is it produced? Is it close to my site?

In this article, SirEnergies invites you to explore in more depth the Green Corporate PPA after a brief description of the other solutions available to any consumer wishing to green their electricity.

How do you get green energy?

To consume electricity from renewable sources and to know where it comes from, there are currently 4 solutions in France for doing so.

Guarantees of origin and green electricity supply offer

First of all, the two simplest solutions for sourcing green electricity are Guarantees of origin and offers for the supply of green electricity:

• Buy guarantees of origin : a guarantee of origin is a electronic document which makes it possible to prove to the consumer but also to all counterparties (customers, employees, etc.) that a specific quantity of electricity was produced by a renewable energy source and injected into the electrical network; it is therefore a traceability and certification system on the origin of the electricity produced.

Today, a guarantee of origin can be purchased regardless of the electricity supply that the company has purchased with its supplier; it is a way of greening its electricity. The first way to buy renewable electricity is therefore to buy guarantees of origin in addition to its standard electricity supply.

• Subscribe to a green electricity supply offer : today, a certain number of suppliers will be able to guarantee that the electricity purchased is of renewable origin.

Offers of this type are diverse and varied and the supplier has the possibility of adjusting its offer to best suit your needs, either by investing directly in renewable production plants, or by buying guarantees of origin, or also by signing a purchase contract of the type Green Corporate Power Purchase Agreement (PPA) with a renewable energy producer (see below).

These offers all have very different characteristics depending on the supplier, it is sometimes a bit complicated to find your way around and understand them, and for this the work of ADEME And of Greenpeace allow you to see more clearly.

Self-consumption and Green Corporate PPA

The other two ways to get green electricity are self-consumption And what is called The Green Corporate PPA :

• Self-consumption : when, on the company's site or on a space for which it controls the land, the company installs a renewable energy production plant, generally a Photovoltaic solar field, and the company consumes directly the electricity produced by this installation.

The company is thus creating an extremely strong physical and local link with this power plant; in addition, its project will be visible. The electricity produced is consumed directly and locally. Such a solution offers a number of advantages, especially in terms of financing.

• The Green Corporate PPA : it is an Anglo-Saxon term which simply means that it is a contract (Purchase) of green energy (Power) signed directly between a producer and a company (Corporate) which is a final consumer of electricity, without going through a supplier or the energy markets.

4 solutions to consume renewable energy

Finally, what you need to remember is that there are:

• 2 simple and relatively basic solutions to source green electricity: guarantees of origin and contracts for the supply of green electricity; and in addition
• 2 more elaborate and more engaging solutions for consuming renewable energy: self-consumption and the Green Corporate PPA.

In the rest of this article, we'll explore the Green Corporate PPA in more detail and compare it to self-consumption, the solution that comes closest to it.

Presentation of the Green Corporate PPA (Power Purchase Agreement)

What is the Green Corporate PPA?

The Green Corporate PPA is a electricity supply contract, in the medium or long term, signed directly between a producer and a final consumer, generally concluded at a fixed price.

This type of contract allows consumers to green their electricity mix and to participate very concretely in development of renewable energies.

Unlike self-consumption, it is not the consumer who will produce his own electricity on his site; this is why we speak of “off-site” PPA: the electricity will be produced at another location by a renewable energy producer, injected into the electrical network, and the company will extract the equivalent energy from its delivery point.

It is therefore a power purchase contract between the consuming company and a green electricity producer.

Motivations for consumers and producers

The reasons for engaging in this type of contract are:

• Societal motivation : consume green electricity, often to meet commitments in terms of CSR (Corporate Social Responsibility) and therefore corporate image (especially for those close to the general public) and the reduction of GHG emissions (greenhouse gases);
• Economic motivation to have access to a competitive and fixed electricity price to secure a business plan or an industrial budget over the duration of the contract, by financing a well-identified renewable energy production plant.

These are motivations that are also found in the case of self-consumption projects, but in addition, in the case of PPAs, there is the possibility of engaging in short contracts as well. Self-consumption only allows you to commit to long contracts of 15 to 20 years.

Greenfield PPA and the short term: two very different purposes

This is why we mainly distinguish between two types of purposes for the PPA depending on the time horizon in which we project ourselves:

• The long-term PPA, says Additional or Greenfield, which makes it possible to contribute directly to the development of new renewable production assets through the purchase and consumption of the electricity that will be produced.

This type of PPA finances the emergence of new installations on the electrical network. With the same logic as self-consumption, contracting is carried out over a long period of 15 to 20 years, generally at a fixed price, which makes it possible to guarantee the economic balance of the project and its financing over time.

The price may be a bit higher than that of electricity on the grid today, but with the guarantee of securing a price over time by avoiding market fluctuations and by offering clear visibility on the bill. Over the duration of the contract, this price may ultimately prove to be more competitive, especially in a context of rising prices over the 15 or 20 years of the duration of the contract.

Like self-consumption, the disadvantage of a Greenfield PPA is that you have to wait, for example 12 to 18 months in the case of a solar field, before being able to consume the green electricity produced.

• Short-term PPA, which allows the continuation of the exploitation of assets that already exist on the network but no longer benefit, for example, from support mechanisms such as purchase obligations.

This type of PPA has two advantages for the end consumer: first of all, electricity is available immediately since the asset is existing; it is therefore not necessary to wait for project development time to benefit from green electricity. Then, in principle, the duration of the contract is Shorter, generally in the order of 1 to 5 years, and it can even be combined with conventional supply contracts, which allows more flexibility when renegotiating contracts.

The interest for producers is to receive a fixed income to improve the availability of their assets by carrying out maintenance and major maintenance operations, since they are in fact assets that have already been in operation for nearly 18 years. They are therefore industrial tools that must be maintained in order to ensure their effectiveness.

Direct PPA, indirect PPA and financial PPA... Explanations:

We distinguish Direct PPA, Indirect PPP and Financial PPA :

Direct PPA : it is a contract corresponding to the direct sale of electricity between a producer and a consumer. The consumer must also enter into a contract with a supplier ensuring the complement and balancing of consumption.

Indirect PPP : it is a contract corresponding to the sale of electricity between a producer and a consumer via a supply contract. The supplier ensuring the complementary supply and the balancing of the contract.

Financial PPA : it is a financial contract signed between a producer and a consumer. In this case, the consumer undertakes to pay the difference between the contract price and the spot price if the contract price is lower than the spot price. And if it is the other way around, it is the producer who pays the difference to the consumer. The objective of this type of PPA is to share financial risks.

The advantages of a PPA

The Green Corporate PPA offers the following advantages to the consumer:

• Long-term visibility of the electricity purchase price;
• Protect yourself against the volatility of electricity prices on the market;
• Valorization of the green origin of electricity and CSR commitments;
• Risk sharing through the signing of a Corporate PPA with multiple buyers.

Engaging in a PPA requires reflection and pragmatism

What does the business really need?

First of all, it must be understood that it is absolutely not trivial to commit to a Green Corporate PPA contract, like self-consumption.

The essential point that differs between a self-consumption project and a CPPA-type project is that, in the case of self-consumption, it is necessary to have a site or to have control of the land where the renewable energy production installation will be located. That is why, in the case of self-consumption, we speak of “On site” project and, in the case of PPAs, we are talking about “off site” project.

However, implementing a Green Corporate PPA is not much more complicated than a standard supply contract.

As with a standard supply contract, the essential and common point of self-consumption and PPA is above all to know your electricity needs well. The consumption profile and the regularity of this consumption will make it possible to size the project.

And so, there may be a slightly different economic reality and a reality of electricity consumption. It is therefore necessary to start from an analysis of consumption records (the 10-minute points) to understand how consumption evolves throughout the year for consumers wishing to engage in a Green Corporate PPA.

An important question for consumers to ask themselves is: how will this PPA fit into their agenda? Does he need this electricity very quickly or does he have a deadline? Should we move towards a short-term or long-term PPA?

In the context of a long-term Green Corporate PPA, the main stages of project development are almost identical to those of a self-consumption project, with the difference that it is not carried out on the company's site. However, this means that from the signing of the contract, the green electricity produced will be delivered when the installation is commissioned and therefore, for example, after 12 to 18 months in the case of a solar field.

A final important point: consumers must check that their Corporate PPA includes obtaining guarantees of origin for the renewable electricity produced so that they can justify the consumption of carbon-free electricity. This may seem obvious at first glance, but in practice it is important to make sure of it, otherwise he would lose the benefit of green electricity. This condition is in principle one of the main reasons for entering into this type of contract.

Combining formulas between PPA and self-consumption opens up new horizons

Several options are possible for a company wishing to engage in a contract of this type, for example it could be:

• Commit to a short-term PPA for 5 years and, at the same time, commit to a long-term PPA over 20 years for a project whose effective supply will only start in 5 years, the combination of the two contracts making it possible to immediately have green electricity for a cumulative contract period of 25 years;
• Commit to a short-term PPA for 3 years and, in parallel, install a solar field on its site for self-consumption for 15 years, which will only come into being in 3 years, the combination of the two making it possible to secure a supply, with the possibility, for example, of having the self-consumption solar installation financed by an external third party;

The possibilities are multiple and open up new horizons, and many companies are now committed to energy transition.

What questions should you ask yourself before engaging in a Green Corporate PPA?

The questions that a company must ask itself in order for the Green Corporate PPA opportunity to best reflect the company's strategy are:

• What is its consumption profile and what part of this consumption should be covered by the PPP?
• What type of PPA to sign? In the short term? In the long run?
• Should the PPA allow the development of new renewable production capacities?
• What are the specific conditions of the contract: traceability? Energy performance? Environmental footprint of the project?

Conclusion: the PPA makes it possible to go beyond the dimension of simple energy supply

Green Corporate PPAs contracts are both an opportunity for producers of find new outlets for their electricity production and for consumers of Securing their carbon-free electricity supply in a sustainable way while reducing their exposure to price volatility in energy markets.

For a company, engaging in a Green Corporate PPA is the possibility of creating value beyond its simple energy needs by: controlling its energy expenditure, covering itself against the risk of climate change, actively participating in the energy transition and strengthening its image as a corporate citizen with its customers.

To go further, do not hesitate to read our article that answers the question Why is energy a major challenge for tomorrow?

Why choose a Power Purchase Agreement for your business?

Buy directly from a renewable energy producer thanks to the green electricity supply contract!
For the buyer, the PPA allows a reduction in the risk of cost volatility, and therefore stable financial forecasts over time.
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PPA solution