Merely a few days after the EC presented the reform of the electricity market model, which sent a clear message that PPA contracts should have state support from the member countries because renewable domestic energy is important for the energy security of their citizens and industry, RESC held the conference RE-Source Croatia – the first in the region, with the topic of developing PPA contracts for the purchase of green energy directly from producers. This conference gathered 350 participants from Croatia, the region, and EU countries last Friday at the Sheraton Hotel in Zagreb.
Opening the conference, Maja Pokrovac, RESC managing director, emphasized that this large number of participants confirmed the relevance and importance of the topic for the energy transition and the modern energy market.
“Last year, Croatia entered the PPA contract statistics for the first time as one of the key mechanisms that the European Commission wants to extend not only to corporations and industry but also to citizens. As it is one of the best ways to speed up the energy transition in the contracting process, state guarantees will also be provided. Croatia is lagging behind in the development of renewable energy sources and is at the very bottom regarding the installed capacity of solar power plants. We must be more successful in this energy crisis. Ensuring a long-term and predictable price of electricity is one of the key tools for Croatian industry to achieve greater competitiveness”, she pointed out.
The conference was organized in cooperation with the European RE-Source Platform, whose headquarters are in Brussels, with which by signing the cooperation, RESC became the bearer of the RE-Source name and the national HUB – a place of knowledge, dissemination of information and education, and exchange of experiences on PPA contracts. But it is already clear that in addition to Croatia, due to the huge interest of participants from other countries, RE-Source Croatia HUB will also cover the region.
Stefano Miriello, public policies advisor in the European RE-Source platform emphasized the importance of this step for the development of PPA in Croatia and the region. He stated out that PPA and cPPA contracts will play a key role in Europe’s transition towards climate neutrality and pointed out that more and more customers from the industry are interested in long-term purchases of green energy through these contracts. This is a signal that we are moving from selling to a buying market, which once again confirms the importance of procuring green energy, for which buyers, companies, and even citizens are showing more and more interest.
Considering that Croatia was included in the European PPA statistics for the first time last year, the first signed PPA contracts were discussed in the first panel entitled Purchase of green energy directly from producers in Croatia, which was excellently moderated by Mateo Žokalj from InterCapital.
On that panel, Igor Radojković from Hrvatski Telekom explained the virtual model of the PPA contract that they are working on, concluding and emphasizing that it is part of their strategy to achieve climate neutrality by 2040 and before that, the goal of meeting 50% of consumption from renewable energy sources by 2025.
Ivona Zagajski from the Marohnić, Tomek, and Gjojić Law Firm pointed out the differences between physical and virtual PPA contracts and the risks that should be taken into account but also said that it should be kept in mind that each individual contract is tailored to the energy buyer and seller. It is important to weigh the risks and benefits, but the long-term benefits of such purchases mean a lot to the market.
Željka Blatančić from Zagrebačka banka said that they are witnessing an increasing number of requests for financing RES projects through PPA contracts, especially in the past year, and that banks are working rapidly to adapt to this change in the market. She pointed out that every bank prefers a long-term contract and that with a good credit rating of the customer and a solid contract, the financing of RES projects is not in doubt.
Mislav Slade Šilović from PwC Croatia commented that a few years ago it was extremely difficult to talk about PPA contracts and explain their benefits, but according to the very large number of interested participants in this conference, it is clear that the time has come for faster and better development of PPA of the contract. Everyone’s interest in secure supply and long-term purchase of energy at fixed prices confirms the importance of this topic.
Tomislav Ćurković, ENCRO C.E.O., shared his experience of signing a virtual PPA contract for a wind power plant that will be built soon and emphasized that cPPA and PPA should be, as the European Commission requires, one of the main incentives for RES development. He said that his company has another 1,000 MW under development, but that the development of these projects depends on the adoption of the necessary by-laws. ENCRO, like other RESC members, has a large number of projects that can stimulate market development as well as offer green energy. In his opinion, further development will depend on state incentives, and the new electricity market model requires just such state engagement.
Models for wider availability of green energy at predictable costs
A very important issue is expanding the availability of green energy to everyone, and this was discussed at the second panel of the RE-Source Croatia conference, which was moderated by Kamilo Vrana, director of EnergoVizija. How to make it possible for citizens, as well as small and medium-sized enterprises, to use renewable energy at long-term fixed prices? This is ultimately the goal of the European Union, which, due to the energy crisis caused by the war in Ukraine, designed the REPowerEU plan. The implementation of it aims to move away from fossil fuels and enable greater use of renewable energy. Corporations and companies that before the crisis signed PPA contracts for the purchase of green energy directly from producers at fixed prices for a multi-year period, happily and satisfactorily weathered the worst days of the crisis, while others exposed to highly fluctuating market prices shut down or had to reduce production.
Therefore, the recently proposed reform of the market that determines electricity prices went a step further and made it possible for the proposed model to provide PPA contracts to small and medium-sized enterprises, which are the backbone of the economy, and then, of course, to citizens.
This was the topic of the introductory lecture by Naomi Chevillard, Head of Regulatory Affairs at SolarPower Europe, which focused on models for achieving this goal. She emphasized that the energy communities will play a major role in the development of the PPA contract and cited the example of a sports club in Portugal that covers its own needs with the help of a rooftop solar power plant, but also shares electricity with families and companies within a 4-kilometer radius. But for these jobs, they hired a third party, a company that performs the administrative, technical, and organizational parts of the project for them.
Referring to this presentation, the participant of the second panel, Zoran Kordić, manager of the Green Energy Cooperative (ZEZ), said that the cooperative model of the ZEZ is very close to the European vision of the implementation of PPA contracts by energy communities, but that it is necessary to remove numerous administrative difficulties with which an organization of enthusiasts and activists cannot handle like, for example, a large company that has both the resources and the time needed to create a PPA contract. The role of the state is crucial here, Naomi Chevillard concluded, noting that the European Commission also envisages the establishment of special state funds that would serve as guarantees for the creation of such contracts. She agreed that it is crucial to simplify administrative processes.
Marin Bekavac, head of processes and energy at CEMEX Croatia, a company that globally wants to drastically reduce its carbon footprint and enable 100% use of green energy in its Croatian branches, agreed with this. Until now, they have not been able to sign a PPA contract in Croatia. There are many reasons why, but one lies in the fact that they need a very large amount of energy. As an example of good practice, he cited Spain, where a state fund guarantees financial support for PPA contracts signed by energy-intensive industries. It is for this reason that the Cemex company in Spain has dozens of signed PPAs. There is no need to invent new models, he concluded, it is only necessary to copy the successful local model and thus Croatia can develop the desired volumes of PPA contracts.
Vladimir Sabo, from the company E.ON, which is the director of retail solutions for customers and the director of the companies E.ON Energija and E.ON Plin, said that E.ON, as a supplier of electricity, is ready to be a partner in the green transition for its customers. This means that it is ready to offer new cooperation models for the availability of energy from renewable sources and through the creation of PPA contracts. Nevertheless, he emphasized, the acceptance of these new business models on the distribution and transmission network is important.
Laurenz W. Vuchetich, a partner in Batarelo Dvojković Vuchetich Law Firm, confirmed how challenging PPA contracts are and highlighted the basic differences compared to those signed with HROTE, which have a high level of security. PPA contracts, he emphasized, carry more risks, and the legal protection of buyers and suppliers will be something that the European Commission will work on in the coming period so that these contracts also provide legal and financial security to everyone.
The first Croatian virtual power plant KOER plays an important role in the availability of green energy, noted its director Marko Lasić. KOER is also the first aggregator in Croatia that offers additional services to producers and consumers of energy in cooperation with the Croatian transmission system operator – in the direction of reducing consumption and increasing consumption, as well as reducing production and increasing consumption. It offers this specific service to industrial plants, and it is in the phase of expanding the model of PPA contracts that were previously available to corporations and now enable them to companies that are large consumers of electricity. He sees his role in eliminating obstacles when concluding these complex contracts.
Conclusion of contracts on the purchase and sale of green energy across the border
In the third panel, the topic of which was cross-border energy purchases, moderated by Stefano Miriello from the European RE-Source platform, large corporations, such as the Greek Mytilineos, explained how thanks to the purchase of green energy through corporate PPA contracts, enabled the safe continuation of their energy business. intensive industries. The company went one step further and became a producer of renewable energy, and is developing more than 400 MW of projects in Croatia, said Vincenzo Quinci, Head of Origination Europe for Renewables, MYTILINEOS S.A. He confirmed that they buy green energy within the country and that the possibilities of virtual PPA contracts are excellent and they sign such contracts more often.
Dorota Debinska-Pokorska, a partner in PwC Poland, said in her lecture, after the panel, that she personally is not an advocate of purchasing green energy through virtual PPA contracts outside the country’s borders due to the great complexity and risks they carry. The creation of PPA contracts within the country is complex, she said, and cross-border ones are additionally demanding precisely because of the different legal provisions of the countries from which the buyer and the producer of green energy come. Different legislation and belonging to different energy markets carry additional risk. Her advice is that it is always better to buy energy within the same country, but if this is not possible, then before buying across the border it is necessary to check everything carefully.
Branimir Beljan, Regional Relationship Manager at Danske Commodities, agreed with this and added that if there is not enough energy to sign a PPA contract within the same country, then the recommendation is to buy within the region because the countries of the region usually share the same reference energy market. This is for Croatian companies, for example, the market of Bosnia and Herzegovina, Serbia, and Slovenia. He does not recommend buying energy from, for example, Germany precisely because of the volatility of the market that is expected in the coming period, and these are risks that should be avoided since such contracts are signed for a period of 10 years or more.
Aleš Jurak, Head of PV Product at RESALTA d.o.o., is of the same opinion. from Slovenia, which mostly signs PPA contracts within the region, but most often in the country where it has branches. Thus, the company signed a physical PPA contract of 0.5 MW with the Ljubljana Airport and considers the development of the PPA contract essential for the development of the region.
Lejla Mešić Suljić, PPA manager at BayWa r.e. pointed out a number of advantages that this type of energy purchase enables and stated that the company has so far signed around 1.9 GW PPA contracts and recently in Spain the first European PPA contract for energy produced from agrovoltaics. It is a virtual PPA contract that proves the effectiveness of these types of contracts. She explained the different models and risks and underlined how these contracts are one of the effective ways of spreading renewable energy.
The conclusion of the conference is that the possibilities of PPA contracts are unlimited and that they will certainly be an important model for buying and selling green energy for a long time, but the state must also be involved in their development through protection mechanisms. Moreover, PPA contracts are a key element in achieving a long-term secure supply of energy from renewable sources, but at the same time in a stronger development of RES, which is important for the state and the goals it has set in its strategy.
The assessment of the participants is that the RE-Source Croatia conference brought very valuable information and that it was a must-attend event!
