Enerdatics' analysis of offshore wind power purchase agreements (PPAs) reveals a significant 35% y/y increase in corporate involvement in 2023. Here are the key points for our analysis:
Rise of subsidy-free auctions and dynamic bidding spur activity in Germany: Germany has recently seen the emergence of zero-subsidy auctions as well as dynamic biddings, where companies are willing to pay for concessions in the event of multiple zero bids. This has led developers to pursue a complex blend of corporate off-takers and market exposure to ensure revenue for their projects and secure financing for construction. A prime example is EnBW's 960 MW He Dreiht offshore wind farm, which has recently secured FiD on the back of PPAs with companies such as Evonik, Salzgitter, and Deutsche Telekom.
Shared risk model between developers and government supports activity in Netherlands: While Netherlands also has a similar zero-subsidy auction model to Germany, the former follows a model where the government assumes responsibility for grid connections and developers bear the revenue and financing risks. This framework has increased developers' comfort in pursuing corporate PPAs, showcasing an innovative strategy for financing renewable energy projects in a competitive market. Notable developers such as Eneco and Vattenfall have embraced this approach, securing corporate PPAs with prominent companies like Albert Heijn and Air Liquide, further illustrating the effectiveness of this model in attracting corporate investment in sustainable energy initiatives.
The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.
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