Incentives and benefits

What are the key local advantages of the corporate PPA model which can benefit our clients?

The key local advantage of the corporate PPA model in Angola is energy security and easier access to financing having the corporate PPA as collateral.

Last modified 9 Feb 2021

In 2016, research done by ARENA found that the majority of Australian companies using renewables for the first time plan to use PPAs to source their renewable energy. PPAs are viewed as a good starting point for businesses wanting to increase their renewables usage, as this type of arrangement is considered to offer more flexibility than GreenPower Purchase.1

Further, renewables can deliver cheaper energy and help businesses to manage the volatility associated with electricity prices and supply in Australia, giving them more control over their energy supply.

Corporate PPAs can also help in supporting carbon reduction commitments.

Major energy users can arrange to acquire renewable energy certificates under the RET as a part of a PPA arrangement. Liable parties (primarily electricity retailers) are required to surrender these certificates each year or risk facing financial penalties and shortfall charges. While not exclusive to the corporate PPA model, the scheme will add value to a PPA deal (provided the client is a liable party).

[1] GreenPower is a (and in fact the only) voluntary government accredited program that enables electricity providers to purchase renewable energy on a household's or business' behalf.

Last modified 16 Dec 2020

Generally speaking, PPAs make brands more sustainable and greener, gives energy and price security, reduces the risks associated with electricity sales and purchases as well as allowing for participation in greater market opportunities. [1]

[1] Next, ‘What is a PPA?’ accessed 11 March 2020

Last modified 16 Dec 2020

Entering into a PPA may be advantageous for companies in various ways. First, corporate PPAs may help a company achieve its sustainability goals. Second, a PPA can allow companies to enter into a long term electricity supply agreement with stable (often even fixed) electricity prices. This creates stability in a company’s cost structure and can potentially be used as a tool for hedging. Finally, a corporate PPA allows undertakings to be supplied with (renewable) electricity at a very attractive price. The supplier of electricity, on the other hand, gets the assurance that he will be able to market its electricity for a long time at a stable price (thereby increasing the bankability of a renewable energy project).

Last modified 25 Feb 2021

Currently, there are no corporate PPAs in Botswana.

Last modified 9 Feb 2021

Due to Brazil’s natural characteristics (hydrology, availability of solar radiations, strength of the winds), the country is a global leader in the generation of power from renewable sources. This vast experience of the Brazilian market contributed to a business environment with great diversification of players, business models and risk appetite which presents opportunities to clients with several business profiles and objectives.

Last modified 16 Dec 2020

The structure of the PPA’s is flexible and there are no regulations that establish restrictions to the parties, whom can agreed the more convenient commercial conditions considering the nature and special characteristics of the relevant business.

From an energy security perspective, all the energy generated is injected to a general system. This means that any energy supply will have back-up, giving the system stability and security.

Regarding PPA’s, there is a very sophisticated local market with the best global practices.

Last modified 16 Dec 2020

  • State, private and public-private partnerships may generate, transmit, distribute and trade electricity without requiring a concession.
  • There are no legal restrictions for long-term PPAs executed between participants of the Wholesale Energy Market (namely generators and retailing companies).
  • Contract law concept of hardship can be disapply contractually by parties.
  • The activity of selling energy in the wholesale market does not require a license but all generators must be registered before a Public Register administered by the Superintendence of Public Utilities.
  • Law 1819 of 2016 created the carbon tax in Colombia. Furthermore, Decree 926 of 2017 created the carbon neutrality mechanism and pursuant to that regulation, a renowable energy project qualifies as an initiative eligible for selling carbon reduction credits.
  • There are no legal restrictions for long-term CPPAs under a self-generation scheme where the IPP is the owner of the assets. When using RSE under a self-generation scheme, surplus energy can be negotiated as energy credits. The Law also provides for the establishment of a Management Fund, which may finance all or part of the RSE projects for residential sectors at levels 1, 2, and 3.
  • Law 1715 of 2014 includes tax benefits as explained in Subsidies.

Last modified 16 Dec 2020

The nature of the benefits arising from PPAs can be diverse; on the customer side, these include mainly long-term fixation of electricity costs, minimisation of the risk of electricity price fluctuations and a guarantee of the purchase of electricity from renewable sources. Thanks to the PPAs, the producers of electricity from renewable energy sources secure a predictable income in the long term, which guarantees them a return on investment and the possibility of obtaining bank financing.

Last modified 26 Jul 2021

The main advantage for private actors that wish to deploy cPPAs is the possibility of supplying electricity off-grid. Currently, 44% of the population has access to electricity, 11% of which is sourced from off-grid electrification. This leaves more than half of the population in need of electricity, creating a potential market for the private sectors to engage in generation and off-grid transmission and distribution of electricity as the government plans to source 35% the access from off-grid transmission and distribution by 2025.[1] Additionally, investment in the area of electricity generation, transmission and distribution will make investors eligible for exemption from Business Income Tax for up to five years. Moreover, loss incurred during the income tax exemption period can be carried forward for half of the exemption period after expiry, the maximum limit being five income tax period. Customs duty exemptions are also applicable to investors in the energy sector.

[1] National Electrification Program 2.0 Integrated Planning for Universal Access

Last modified 18 Feb 2021

Local advantages in Finland regarding the use of PPAs include excellent wind conditions, large share of unutilised land, net power deficit and governmental goal to reach full coal exit by 2030. In addition, Finland is part of the Nordic wholesale electricity market (Nord Pool), which includes the Nordic countries as well as the Baltic countries. The Nord Pool enables sale and purchase of electricity between the Nordic countries as well as day-ahead and intraday trading, clearing and settlement, data and compliance. The power grids in the Nordic countries are interconnected; Finland is in direct contact with the system of Sweden, Norway, Estonia and Russia.

Further, according to Transparency Int., Finland is the third least-corrupt nation, which provides a strong basis for large scale projects.

One special characteristic of the Finnish market is that the feed-in-tariff subsidy scheme was replaced by a premium auction scheme for 1.4 TWh of new capacity, which was executed through the auction process finalized in March 2019.

In addition, the prices of emission rights were on the rise in 2018 and are expected to continue to rise. This in turn affects the prices of stock exchange electricity because the rising costs of emission rights affect the production costs of electricity produced with peat and fossil fuels.

Last modified 16 Dec 2020

The corporate PPA model enables German corporations to be recognised for their renewable energy achievements, potentially giving rise to reputational benefits. Corporate PPAs may also enable corporations to improve their ecological footprint and assist them to meet their sustainability commitments.

Last modified 16 Dec 2020

The primary benefits of the corporate PPA model deployed in Italy are:

  • the take-or-pay mechanism, which allows all the renewable energy produced by the plant will be purchased by the buyer;
  • certainty of future cash flows for the purchaser.

Last modified 16 Dec 2020

As the corporate PPAs market in Kenya is yet to be widely developed, the advantages of using this model tend to mirror the advantages of corporate PPAs on a general level:

  • energy security (particularly reduction of black/brown outs and surges if direct-wire solutions are used);
  • discretion to use specific energy sources or exclusively renewable energy as a means of satisfying CSR requirements;
  • avoiding high (and increasing) costs of power supply from a state-owned utility and/or passing on the pricing risk;
  • for direct-wire solutions, excess power sold back to the grid may create a source of revenue; and
  • direct-wire PPAs may be the only means of generating and accessing in some instances as the national transmission network does not always cater for very remote connections. 

Last modified 18 Feb 2021

Under the Self-Supply scheme, the most beneficial aspect is price. Renewable developers have been able to offer significant discounted prices to the standard CFE end user price.

For projects post the 2013 energy reform, where the Self-Supply scheme is no longer available, large consumers are still looking, first to comply with the clean energy minimum consumption requirements; second, to obtain lower prices from renewable sources; third, to use in their advertisement that they are a “clean energy user”. Finally, but not less important, companies are looking for reliability in the supply.  

Last modified 16 Dec 2020

The price is freely agreed by the parties and is not determined by the law (no feed-in tariffs).

Last modified 10 Feb 2021

Officially there is no PPA model as approved by the Government. The consolidated practice is that EDM is the principal off-taker has developed a PPA model which it uses to agree on the offtake.

Key advantages:

  • Pricing flexibility – the government grants special tariffs in order to attract investment to power projects.
  • Tax incentives – the relevant legislation grants special tax benefits in order to attract investment to power projects.
  • Off taker credit support – to secure payment obligations under the PPA.
  • Political risk cover – the government accepts political risk concerns raised by Concessionaire and Lenders; such cover is usually provided from multilateral development banks and other financial institutions.

Last modified 1 Feb 2021

Flexibility in order to be able to predict pricing would be the major local laws advantage at this point in time.

Last modified 16 Dec 2020

Corporate PPAs militate against market risk and secures returns for investors. The market has matured in the last 3-4 years with many new entrants and pricing products available, promoting flexibility.

Last modified 16 Dec 2020

In the case of free customers, PPAs are very flexible and offer the parties the ability to negotiate the best agreement possible, as long as mandatory regulations are not breached. Prices, volume, and terms can be freely negotiated between customers and generation companies and usually reflect reasonable and fair assignment of risks and costs.

As to PPAs which supply regulated clients, the framework establishes certain strict rules that do not directly limit the contents of the PPAs but restrict the ability of certain commercial decisions. For example, the legal framework establishes the moment in which public tenders have to be carried out by distribution companies, establishes maximum prices, minimum terms, conditions and volume.

Last modified 16 Dec 2020

  1. Potential increased reliability of supply by diversifying suppliers to avoid possible supply constraints.
  2. Price certainty given the uncertainty of utility price increases.
  3. Reduce carbon footprint and potentially benefit from offsets or incentives in terms of the Carbon Tax Act No. 15 of 2019.
  4. Support local economic development (including skills development and job creation) through a more established local renewable energy industry.

Last modified 16 Dec 2020

The gap between market price and generation cost in Spain has led during the last year to the signing of PPAs with an installed power of 4.000 MW, with records like the photovoltaics PPAs between Audax and Cox Energy (600MW) and WElink  (708MW). The costs of photovoltaic energy have fallen in Spain by 81% since 2010.

Last modified 16 Dec 2020

The Swedish PPA market is amongst the most developed in the world. As a result offtakers and developers have been able to secure increasingly creative and ambitious offtake solutions in a Swedish market that is very familiar with PPA arrangements. Indeed, rather than the green certificate system. the advent of corporate PPAs has been the main factor in the rapid development of onshore wind power in Sweden.

Last modified 16 Dec 2020

Not applicable.

Last modified 9 Feb 2021

Energy security and the availability of consistent 'quality' electricity at cheap prices are key, especially so in remote areas where energy supply may be unreliable and of poor quality.

Last modified 21 Jan 2021

All EU Member States are obliged to have a Guarantee of Origin scheme for renewable source electricity, which has been implemented in GB as the Renewable Energy Guarantee of Origin (REGO), of which Ofgem is the system administrator.

Unlike some Member States, GB allows for the issuance of REGOs to supported generators. This has ensured a liquid REGO market in GB, and many cPPAs use REGOs/GoOs as evidence of the transfer of renewable benefit from the generator. GB is, however, reducing support offered to generators, most recently closing its Renewables Obligation scheme to new capacity on 31 March 2017.

Last modified 16 Dec 2020

The purchase of RECs bundled with renewable energy in whatever form allows corporate buyers to “claim” the use of renewable or green energy. Once claimed, the RECs are then considered “retired.” On-site generation can shield corporate buyers from reliability issues on the bulk system.     

Last modified 24 Mar 2021

Angola

Angola

To what extent are corporate PPAs presently deployed and what sort of structure do they take?

Corporate PPAs remain uncommon in Angola. 

Article 48 of the Electricity General Law provides that outside the scope of the public electric system, the conditions of sale of electric energy will be established by the parties.

Article 15 of the Executive Decree No. 122/19 of May 24 (electric energy sales tariffs) provides special arrangements for the sale of electricity by means of special or bilateral contracts between producers and distributors and those with final customers, under the terms set out in the Tariff Regulations (Presidential Decree No. 4/11 of January 6) shall be authorized by an order of the Minister of Energy and Waters, after hearing the regulatory authority.

All the contracts with National Transportation Network ("RNT" as a sole buyer must comply with certain requirements specified in Article 11 of the Presidential Decree No. 4/11 of January 6 as amended by Article 11 of the Presidential Decree 178/20 of June 25, in order to their prices are allocated to tariffs.

Do the country's regulators allow corporate owners to purchase (1) directly from a facility, or (2) from a choice of suppliers?

In accordance with Article 11 of the General Electricity Law, the use of the facilities and networks that incorporate the Public Electricity System is allowed under the conditions provided for in the aforementioned regulation or agreed between the interested parties and their holders, as long as the supervisory body approves it after prior validation by the regulatory authority.

Hence, corporate owners are allowed to purchase directly from a facility or a choice of suppliers, as long as it has been approved by the supervisory body and has effectively gone through a prior validation from the regulatory authority.

Other than the generator and the off-taker, are any third parties commonly party to the PPA structure (e.g. a utility or other market agent)?

In addition to the electrical energy provided by the Company ENDE E.P (National Electricity Distribution Company) that comes from hydraulic dams and private generators, so far, there are no other third parties as a common party to the cPPA structure.

Is a generator permitted to sell electricity directly to an end user? If so, do they require a licence or other form of authorization?

As previously stated, Article 48 of the Electricity General Law provides that outside the scope of the public electric system, the conditions of sale of electric energy will be established by the parties.

Last modified 9 Feb 2021

Angola

Angola

What are some of the technical, political, financial or regulatory challenges to corporations adopting green energy in the short/medium term in your country and how have these challenges been overcome (or how can they be overcome)?

More incentives and benefits need to be created for companies that want to implement green energy systems. Facilitating the process of importing and accessing currencies to pay for equipment to implement the projects related to renewable energy is necessary. Governments should create incentives for companies that are implemented across the country, thereby creating employment and facilitating greater acceptance of new technologies in rural areas.

Last modified 9 Feb 2021

Angola

Angola

Are there any anticipated regulatory changes which will alter the regulatory landscape for corporate green energy and corporate PPAs?

International development partners are providing technical support to the Angolan government to establish a regulatory framework which includes negotiating power purchase agreements with independent power producers (IPPs) and design of a feed-in-tariff scheme for renewables.

Last modified 9 Feb 2021

Angola

Angola

What is the corporate appetite for green energy, including any political or financial incentives available to corporates to adopt green energy?

Even though national and international companies have been showing interest to develop green energy structures in Angola, this is still something that has to be well studied and thought through it. However, there are already small dimensions of solar energy structures being developed, for example, but only for particular purposes.

What are the key local advantages of the corporate PPA model which can benefit our clients?

The key local advantage of the corporate PPA model in Angola is energy security and easier access to financing having the corporate PPA as collateral.

What subsidies are applicable to the generation and sale of renewable energy?

This information has not been made public.

Does your country implement a national support scheme with tradable green certificates (such as guarantees of origins)?

Not yet, as green energy has not yet been implemented.

Last modified 9 Feb 2021

Angola

Angola

To the extent corporate PPAs are deployed, how are prices, terms and risks affected?

Do prices tend to be floating or fixed?

According to Article 26 of the Presidential Decree 178/20 of June 25, the tariff structure is applied by the RNT concessionaire and by the distribution companies to users connected to their networks. Along these lines, this same diploma, on its article 27, establishes that the tariff structure reflects the costs to which users give rise, according to the characteristics of consumption and the level of tension to which they are connected, regardless of their social or legal character and the final destination give to the energy consumed. 

Hence, the prices are fixed considering the elements above mentioned.

What term is typically agreed for the PPAs?

There is not a fixed-term for cPPAs it all depends on the activity to be exercised. However, it is important to mention that the tariff regime is, in general terms, in force in a four-year tariff regime. Alongside with that, the tariff period is defined by a specific diploma by the Sector Regulatory Entity, which must be multiannual, as established on Article 28-A of the Presidential Decree 178/20 of June 25.

Are the PPAs take-or-pay or limited volume?

Not applicable.

Are there any other typical risks?

Not applicable.

To the extent corporate PPAs are deployed, in whose favour will the risks typically be balanced?

Volume risk

The risk is born by those who not comply with rule applicable to the specific situation.

Change in law

Usually, when changing legislation, users and distributors are given a period to prepare and adapt to this mentioned change of legislation. Hence, when there is a change in law non complied with, the risk is born by those who have not complied with the rule in place.

Increase / reduction of benefits

Again, similar to the change in law, the risk is born by those who not comply with rule applicable to the specific situation.

Market liberalization (if applicable)

Not applicable.

Credit risk

The risk is born by those who not comply with rule applicable to the specific situation.

Imbalance power risk

The risk is born by those who not comply with rule applicable to the specific situation.

Production profile risk

The risk is born by those who not comply with rule applicable to the specific situation.

Last modified 9 Feb 2021

Angola

Angola

Does your country operate a balancing responsibility scheme?

Not applicable.

If your country operates a balancing responsibility scheme, who is the balancing authority and do the generator and offtaker typically undertake balancing themselves?

Not applicable. 

Last modified 9 Feb 2021

Angola

Angola

What significant transactions/deals have taken place in the last 12-18 months?

Laúca Hydroelectric Power Plant

According to the Government, Laúca Hydroelectric Power Plant (“AH Laúca”) is the largest work in the country today. The Project was commissioned by the Angolan Executive, represented by the Ministry of Energy and Water, and is carried out by ODEBRECHT. COBA and LA MAYER carry out the supervision of the implementation of the project. When AH Laúca is 100% operational, it will produce more than twice as much energy as the other two dams already operating on the Kwanza River. This energy potential will serve 8 million people. AH Laúca will produce 8,643 GWh (gigawatts) of electricity, representing an installed capacity of 2,070 MW (megawatts).

The realization of the project demands great infrastructure support. Because of this, AH Laúca is today a city that is composed by: Leisure area; Sports area; Accommodations; Kitchen and Cafeterias and Medical Center.

AH Laúca is a pole of job and income generation. The project is also committed to providing opportunities for national talent. Today, the enterprise has 8,458 Members. Of these, 8,035 are national, which represents 95% of the entire productive force involved in the execution of the work. The remaining 423 are expatriates, a number that represents 5% of total members.

Through the Acreditar Program, the project offers basic and specific training to AH Laúca Members and also to the residents of the communities surrounding the construction site.

AH Laúca is 86% ahead of Civil Works, 72% ahead of Electromechanical Assembly and 14% in the Energy Transport System. Always overcoming challenges and fulfilling all the goals set with safety, quality and productivity.

2nd Hydroelectric Power Plant of Cambambe and Dam Alignment

With the conclusion of the Cambambe 2nd Power Station and the Dam Raising, it was possible to obtain an additional power of 780MW. This power is helping to reduce the energy supply deficit in the Provinces of Luanda, Kwanza Sul, Malanje, Uige, Kwanza Norte and Bengo.

It will also allow the interconnection of the North-Central Systems with the Benguela Province link, thus reducing production costs and the consumption of diesel for energy production.

More than 10,000 construction posts have been created as part of the temporary work in the rehabilitation, modernization and extension of the hydroelectric complex. The construction owner was GAMEK (Gabinete de Aproveitamento do Médio Kwanza) and the contractor was ODEBRECTH.

Solar village program

The main objective of the Solar Village Programme is electrification, through the installation of autonomous solar photovoltaic systems (isolated) in infrastructures Social, including: Schools; Medical Posts; Police Posts; Administrative Buildings; and, Social Jangos, including Public Lighting Posts.

In the 1st phase of the Programme, awarded to the company Elektra Electricidade e Águas, Lda, 11 localities were selected from 4 Provinces in the country: Bié, Kuando Kubango, Malange and Moxico. This phase has been completed since 2011, with a total of 156,660 Wp of 42 systems and 70 public lighting posts implemented.

In some cases, a system provides electricity to more than one infrastructure. So far, 50 infrastructures have benefited from the electricity supply, namely: 15 schools, 18 medical posts, 1 maternity ward, 1 police station, 1 police station, 9 administrative residences, 1 nurse's residence, 3 administrations.

In the 2nd phase of the Solar Village Programme, four companies were selected for the installation of a total of 75 systems and 160 streetlights.

As part of the 3rd phase of the Solar Village Programme, the project has already started after the Auto de Consignation signed with the Company LTP Energias S.A. The project will benefit the provinces of Kwanza Sul, Cuando Cubango and Lunda Sul, whose aim is to supply electricity to the communities with Solar Photovoltaic Systems of Auto-consumption Kits and Public Photovoltaic Lighting.

It is part of the energy and water sector action plan 2018-2002, to continue the Solar Village Programme and to ensure adequate maintenance of its infrastructure and test a new concept of a 100% solar mini network, based on batteries, to electrify the most isolated municipality headquarters, avoiding fuel logistics.

What transactions/deals are anticipated to come to market in the next 12-18 months?

See Past transactions

Last modified 9 Feb 2021