Growing popularity cPPA, i.e. corporate electricity purchase agreements, results from the need to secure energy volumes from renewable energy sources (RES), meet ESG goals and the desire to guarantee stable prices in contracts.
Development of the cPPA market in Poland
The cPPA market is relatively new in Poland – the first contract was an agreement between Mercedes Benz and the manufacturer VSB, in force since 2019. Since then, the number of signed contracts has been regularly increasing – according to data collected by RE-Source Poland Hub, in the first ten months of 2023, 19 such contracts were signed, while there were 17 of them throughout 2022. The authors of the report “The cPPA market in Poland” estimate that by December 2023 number of concluded contracts it could even surpass 25.
Number of cPPA agreements / Forsal.pl
The amount of contracted green energy is also increasing. The exception was 2022, in which a slight decline could be observed compared to 2021. According to the authors, this is due to, among others, from the introduction of maximum energy prices, i.e. the so-called price caps, which were supposed to be a response to high electricity prices related to Russia’s aggression against Ukraine.
Contracted green energy under cPPA agreements in Poland / Forsal.pl
However, Poland still has a relatively small share in the European cPPA market – only 4%, while the share Spain that’s 23 percent, Germany and Sweden – 13 percent, a Great Britain and Norway – 8 percent However, we are ahead of countries such as: Belgium (2 percent) or Greece (1%).
The most popular cPPAs
More and more companies are looking for opportunities contracting energy produced in two technologies: photovoltaic and wind farms – according to the report. This is a trend observed since the turn of 2022 and 2023 – previously, until 2021, sales from onshore wind farms dominated, and from 2022 the popularity of energy from large-scale photovoltaic farms began to grow. The authors of the reports assume that with development Baltic Pipe investment, offshore wind energy will have an increasing share in contracts. Such agreements have been signed already in 2022 and 2023, including: with Umicore, Google or Amazon.
The time horizon included in contracts is also to change – currently approx. 80%. contracts are concluded for a period of 10 to 15 years, but companies are increasingly interested in contracts for 5-7 years. Meanwhile, at the beginning of the market development, contracts with a perspective of 15-20 years were standard.
Changes in Polish law
By 2023 corporate electricity sales contracts were not reflected in Polish law – this was changed by the Act of August 17, 2023 amending the Act on Renewable Energy Sources and certain other acts, which transposed the definition from EU law to Polish law Energy law. In art. 5 section 2a states that the transport of electricity covered by a contract between the producer and the recipient may take place on the basis of a contract for the provision of transmission or distribution services or via a direct line.
The regulations regarding a direct line, i.e. a power line connecting a separate generating unit with a separate consumer in order to supply energy, have also changed. From 2023, it is not necessary to obtain the president’s consent for construction Energy Regulatory Office, which has so far blocked some investments. Instead, an application must be made to the list of direct lines, and the President of the Energy Regulatory Office may refuse to make an entry only in situations specified in the regulations.
Green energy and ESG reporting
Popularity of cPPA contracts also results from the increasing importance of ESG reporting. Although so far companies have not been obliged to calculate their carbon footprint, from next year it will be a mandatory element in the reports of the largest companies. In the coming years, smaller and smaller entities will join them, which results from the Corporate Sustainability Reporting Directive (CSRD).
Companies calculate their carbon footprint in three areas – the first concerns fuel combustion in the company, the second – the energy consumed, and the third – other emissions that arise in the value chain. The popularity of cPPA is due to the need to report on the second scope – if a company uses contracted green energy, its carbon footprint in this category is smaller.
Anna Gorączka, ESG leader at the Allegro Group, told us about it. – The biggest challenge related to reducing own emissions is the regulatory instability of the energy market. This makes it difficult to predict how quickly the development of renewable energy will progress and whether and when green energy will be available – she commented. – We partially responded to this challenge by concluding a ten-year cPPA. She assures energy price stability for the company and enables obtaining a guarantee of energy origin.
