Enerdatics data suggests that the region has witnessed 34 corporate power purchase agreements (PPAs) for ~800 MW of reported capacity in 2022. The activity was led by Denmark and Sweden, which accounted for ~68% of the contract volume. Enerdatics understands that the activity is driven by the market volatilities and uncertainties associated with merchant risk. Historically, developers in the Nordic market have relied heavily on the merchant market for revenue. However, increasing fluctuations in spot prices have compelled developers to adopt a quasi-merchant revenue model, under which a substantial portion of the capacity is contracted to corporate off-takers at a fixed price and the remainder is sold on the wholesale market. This incentivizes expanding mid-sized and large corporate off-takers, who are considering PPAs to mitigate budgetary risk associated with power expenditures. In addition, developers and off-takers are able to negotiate agreements with greater ease in comparison to other regions due to Nordics' lower power prices compared to the rest of Europe. The lower prices exist as a result of the dominance of hydro power in the region's generation mix, compared to the rest of Europe, which relies primarily on Russian gas to satisfy its power demand.
Recent PPA: Renantis has signed a PPA with Amazon for the Mustalamminmaki and Koiramaki onshore wind farms in Finland. The projects have a combined capacity of 59 MW and are currently under construction, with commercial operation scheduled for the end of 2023. The projects represent the first wind farms developed by Renantis in Finland. Formerly known as Falck Renewables, the Italy-based developer already has operating wind farms in other Nordic states, including Norway and Sweden.
Other significant PPAs: Since 2022, the technology and telecoms sectors have been at the forefront of the region's PPA boom. Some of the recent PPAs signed include Meta’s agreement with Luxcara for 210 MW in Denmark, Equinix’s deals with Neoen and Prokon for ~134 MW in Finland and Microsoft’s arrangement with NTR in Sweden.
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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