Poland as a country with a weak and unstable RES support scheme has favourable conditions for development of corporate PPAs (Power Purchase Agreement) – contracts for purchase of power from a specific RES installation (e.g. a wind farm) by an off-taker. The issue to be solved is still the adjustment of what the power producer sells to meet the specific requirements of the client.

Corporate PPAs were the main topic of the 19th Wind Energy Forum. While such contracts can be treated as an alternative to public support for RES funding, the participants of the discussion agreed that in Poland PPAs will not dominate the funding and will not become a universal recipe for development without a change in political stance towards RES, but they may help the wind energy industry survive the worst period.

A corporate PPA is a contract between a generator of "green" energy and a specific off-taker, often for a long term, with a possibility to apply a broad range of conditions and price formulas. On the one hand they offer RES generators a stable basis for project funding, on the other – the off-taker can hedge against price risk. There can be multiple generators and off-takers under one contract, operating jointly or via an aggregator.

Despite restrictions imposed by the Wind Turbine Act (also called the "Distance Act"), there is still about 3,000 MW in valid building permits for wind turbine projects in Poland. With vague prospects for wind power under the auction scheme, PPAs may be the last chance for these projects to be built.

One of the reasons is that the model of funding via PPAs develops mainly in countries where there is no stable support scheme or it is insufficient for the investor's needs. Examples include the United Kingdom – where the old support scheme has been phased out and the auctions for onshore wind have not started yet, or Sweden – where the prices of green certificates are very low. Moreover, in the upcoming "Winter Package" there are several provisions that may significantly facilitate PPAs. A few days ago over 50 large corporations and business organizations have called upon EU energy ministers to introduce legal regulations facilitating corporate PPAs and to increase the EU's 2030 RES share target to at least 35 percent.

From the financial point of view, a long-term power purchase agreement may significantly facilitate the financing of RES development. "For a bank, the more the contract reflects the market, the less important its duration is. […] If the price can be guaranteed for at least 5 years, it certainly helps" – said Anna Chmielewska from the EBRD. She pointed out that the traditional financing model for wind farms was based on fixed-price contracts with very good off-takers, and that such financing will certainly be the cheapest. "But we need to take into account the fact that some off-takers have a shorter time horizon. Then it is worth considering a move towards a more market-based PPA. […] In such a case it has to be considered that investors or banks may take a risk premium. But it is certainly bankable" – she said.

On the other side, more companies and corporations decide to purchase "green energy", in order to meet their own RES share of sustainability targets, but also to ensure supplies of energy for many years at an attractive price. For example, Google is already using RES to cover 100% of its energy consumption, also using PPAs to source 3,000 MW of capacity, mainly in wind, for its own purposes. In Poland, first contracts of this kind are currently being negotiated.

A fundamental problem raised by the participants of the Forum is to adjust what is offered by the power producer to what the off-taker needs. The difference in production and consumption profiles has to be balanced, by means of trading or physically, which leads to additional costs.

The off-taker does not have a guarantee that the price paid will be attractive from the market point of view. Sometimes non-market factors may be decisive, such as distribution fees which are significantly lower in case of using local RES. In general there is a clear need to develop mechanisms for both sides to share the price risk, as 10- or 15-year power purchasing agreements, especially at a fixed price, may be difficult to accept from the point of view of many corporations. However, traders declare that they can evaluate and take over all risks for many years ahead, except for political and regulatory risks.

Today no one denies that in the long term most of the energy will come from RES, and that subsidies will be gradually phased out. According to Wojciech Kawecki from wind turbine manufacturer Nordex, one may even risk a statement that today no support for renewables is necessary in Poland, if the government does not create obstacles to development. "Auctions for wind are not needed. On average, the cost of energy production from wind drops by 10 percent per year due to technology cost reduction" – he said, also mentioning the most recent wind turbines with a 170 m tower and 140 m rotor diameter. "In markets such as Poland, such machines may help projects be implemented without support. We only need good will and changed regulations to be able to utilize this technology" – he emphasized.

"If we had a new build project that is commercially viable with a price of 220 PLN/MWh under a PPA, then such a project would certainly be possible to fund" – said Anna Chmielewska. 

An additional benefit – as pointed out – is that energy consumption in Poland is rising, and due to the high share of coal in the mix there is a high risk of price increases. This may lead to increasing demand for energy without the burden of CO2 emission costs.