Originally, AAEs were supposed to finance 100% of the production assets, but this means very large contractual terms (10 to 15 years) whereas a regular electricity supply contract usually lasts one, two or three years. This non-parity discourages C-I customers, which is why the AAE market is evolving with offers combining the advantages of an AEA and the flexibility of a regular supply contract. Ireland has already had several AAEs for some time. However, in 2019, ppA will be signed for the first time to specifically finance new renewable energy projects. Amazon announced in April that it will purchase all 91 MW of electricity from a new wind farm in Donegal County2, developed by Invis Energy3. Electricity is used to power the company`s Amazon Web Services (AWS) computing centers in Ireland. CPPAs differ from the original guarantees. As an original guarantee, an older system, a wind farm was already producing energy and a company would buy the rights to allocate that energy to itself. In a CPPA, the wind farm would not have been built without the company`s funding. In August, online retail giant Amazon announced it would buy power generation from a Cork wind farm after a similar deal in Donegal to feed its power-hungry computing centers. “Over the last 10 or 20 years, green has made a compromise or borne additional costs. Now people can see these private companies looking at green electricity to keep their costs low in the future.
So why do we think that an AAE market is accessible to Irish companies, when other markets, arguably more advanced and more competitive, have had little success elsewhere in Europe? The two main requirements for a dynamic business AAE market are the appetite for green energy from local companies and a pipeline of voluntary renewable energy projects. For the former, in Ireland, more than 60% of the RE100, an initiative of the Climate Group, in which the world`s most influential companies commit to achieving 100% renewable energy by a deadline. While networks and project planning in the field of renewable energy have been put in place in recent times, these barriers are beginning to widen, leading to the emergence of a strong pipeline of approved projects, including wind and solar, all of which are looking for an effective path to market. “This means that we have a new way of financing renewable electricity projects. I think what this means is that renewable electricity is now becoming a very good value,” he said. Under this system, the wind farm sells its electricity on the wholesale market like any other generator. As usual, this electricity is purchased by an electricity distributor such as Electric Ireland or Energia, which sells it to private and professional customers. The Irish electricity market is undergoing significant changes, with the introduction of new market rules in the form of an integrated internal electricity market (I-SEM).
Under the I-SEM, producers must find a path to the market for their performance and will face new risks – in particular a balance between liability and imbalance costs. Power Purchase Agreements (PPAs) are an important way to achieve the market and risk management instrument, particularly for renewable generators such as wind and solar. This comprehensive course will provide a basis in the PPAs – the different types of contracts, their structure and key conditions, risks and benefits, prices, their current/future application in Ireland and their negotiations.