PPA structures and parties involved

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

Direct selling is permitted in Australia if the corporate entity registers as a Market Customer. Once registered, the corporate stakeholder is able to purchase electricity directly from the grid at spot prices which are then hedged as part of a Corporate PPA arrangement in place with the electricity provider. This framework is not commonly used though because there are extra costs and regulatory steps involved with obtaining Market Customer certification.

It is important to note that the structure of the National Electricity Market (NEM) in Australia is such that all physical power has to be bought and sold via the Australian Energy Market Operator (AEMO), regardless of how any individual power purchase agreement is structured. With this in mind AEMO must still maintain background involvement in any “direct selling” which occurs involving generators and corporate entities. 

Last modified 16 Dec 2020

EWA is the sole body responsible for electricity transmission, distribution and grid operations.[1] Please see Third parties.

[1] The Kingdom of Bahrain National Energy Efficiency Action Plan (NEEAP) (Sustainable Energy Unit, Bahrain, January 2017)

Last modified 16 Dec 2020

As a first point, it is to note that holders of a supply licence granted in another Member State of the European Economic Area, specific rules apply which facilitate the issuance to them of one or more of the supply licences mentioned below.

Federal level: A federal supply licence is required for the supply of electricity by an intermediary to customers established in Belgium who are connected to the transmission grid or to a direct line with a nominal voltage exceeding 70 kV.

Flemish Region level: The supply of electricity to customers through the distribution grid (i.e. the grid with a voltage equal to or less than 70 kV) or the local transmission grid of electricity is subject to a supply license issued by the Flemish regulatory authority (VREG).

Generally speaking, this obligation will not apply to supply of electricity via a direct line (defined as an electricity line with a nominal voltage equal to or less than 70 kV that connects a production installation to a customer) rather than through the distribution grid.

Walloon Region level: The supply of electricity to end consumers through the distribution grid (i.e. the grid with a voltage equal to or less than 70 kV) or the local transmission grid of electricity is subject to the prior grant of a (general or a limited) supply license issued by the Walloon regulatory authority (CWaPE). 

The construction of a direct line is subject to the prior grant of an individual authorisation issued by the CWaPE.

Brussels Capital Region: The supply of electricity to end consumers through the distribution grid (i.e. the grid with a voltage equal to or less than 70 kV) or the local transmission grid of electricity is subject to the prior grant of a (general or a limited) supply license issued by the Brussels regulatory authority (BRUGEL). A distinction is made between regular licenses and "green licenses", the latter being awarded to suppliers of green electricity.

Direct lines with a voltage equal to or less than 70 kV may be laid subject to the prior granting of an individual permit issued by the Minister.

Last modified 25 Feb 2021

A generator may not sell electricity to consumers and customers, except in terms of a licence issued by the Botswana Energy Regulatory Authority (“BERA”) authorising the sale of such electricity.

Last modified 9 Feb 2021

Yes, the generator may sell electricity directly to the end user, provided that both the generator and the end user are participants of the Free Market.

To be part of the Free Market, the parties must be enrolled as agents before the Chamber of Electricity Commercialization (CCEE). The enrolment process involves the providing of several documents and information related to corporate and financial aspects of the company, the adhesion to the commercialization rules, the adequacy of the consumer’s or the generator’s electricity measurement systems, among other steps.

Last modified 16 Dec 2020

A generator can sell electricity directly to end users. 

In the Chilean system, there are two types of end users: regulated clients and free clients. 

Regulated clients are those costumers whose power demand is less than 5000 kW and their supply of electrical energy and services are subject to pricing and quality standards previously defined by regulation. These kinds of clients obtain the energy supply only from the distribution companies, which have an electrical concession in the relevant area where the clients are located. 

Free Clients are customers whose power demand is greater than 5000 kW and who can freely negotiate electricity prices with the suppliers, setting the conditions of supply through private contracts. The advantage of being a free client is that the generators offer lower prices than the regulated distribution price as general rule. Free clients are usually big industries, such as mining companies, factories, and also high demand facilities such as universities, hotels, malls, among others.  

Last modified 16 Dec 2020

No, pursuant to Law 143 of 1994 and regulation issued by the Colombian Energy Regulator, it is forbidden for a generator to sell energy to an end consumer. Although only retailing companies are entitled to sell energy to an end consumer, vertical integration between generation and retailing activities is permitted. As mentioned before, only under a self-generation scheme could an Independent Power Producer sell energy to an end consumer and no license or other form of authorization is required.

Last modified 16 Dec 2020

Yes, this is possible. It needs to obtain an electricity trader's licence or electricity generation licence. The difference between the licences is whether the generator supplies the end user with electricity through a direct line, where it must obtain a generation licence, or through the public grid, where an electricity trader's licence is also required.

Last modified 26 Jul 2021

Yes, Independent Power Producers upon acquiring the necessary licenses, can directly sell electricity to end-user as long as the transaction is off-grid. EEA has recently introduced a directive to regulate mini, off-grid power generation, transmission and distribution to communities, but this directive does not specifically address cPPAs. As mentioned above, the state-owned enterprises are granted exclusive rights for transmission and distribution of electricity through the national grid.

Last modified 18 Feb 2021

Direct selling is permitted in Finland. The sale of electricity does not need licensing. PPAs may be entered into directly between the producer of electricity and the buyer, or electricity may be transmitted using a third party intermediary.

Last modified 16 Dec 2020

Save in circumstances where energy supply companies are supplying household consumers, there is no licence (or other form of authorisation or notification) requirement for a generator to sell electricity directly to an end user. However, registration with the market master data register (Marktstammdatenregister) will be required. Also notification requirements and tax related requirements may apply.

Last modified 16 Dec 2020

Yes, by means of the SEU (Sistema Efficiente d'Utenza). Prior to its entry into operation, a SEU is required to apply for the obtainment of the operating license (licenza di esercizio) from the relevant Customs Agency for the payment of the excise duties.

Last modified 16 Dec 2020

If a generating entity has obtained a generating licence, it is permitted to operate the generating plant and to connect to a distribution network in accordance with the provisions of the Energy Act. 

While the Energy Act does not provide for how a generating entity should sell directly to an end-user, it appears open for the generating entity to sell electricity directly to an end-user who is an ‘eligible consumer’ within the meaning of the Energy Act (see our response on Regulators above).

By definition (section 2 of the Energy Act), an eligible consumer may contract ‘persons authorized to generate electrical energy’ for the purchase of electricity. Accordingly, a generator must be authorised to generate energy (i.e. licensed) even if selling electricity directly to an end-user. 

If the energy needs to be distributed or transmitted to reach the end-user, the generator will also have to be properly licensed to carry out those activities (ss.136 and 140 of the Energy Act). It is expected that the Regulations to the Energy Act will provide more detail on this, once established. KENGEN (the state-backed) generator has already announced its intention to supply industrial consumers once clear Regulations are in place.

Last modified 18 Feb 2021

Yes, as long as the user is registered with the CRE as a qualified user (minimum average consumption of 1 MW per year). The generation will need a generation permit with the CRE.

Last modified 16 Dec 2020

Yes.

Renewable energy production installations are subject to different regimes depending on their installed capacity:

  • free-regime: applicable to renewable energy electricity production installations with an installed capacity, per site or group of sites owned by the same operator, of less than 20KW;
  • prior declaration: applicable to renewable energy electricity production installations with an installed capacity, per site or group of sites owned by the same operator, between 20KW and 2MW. This prior declaration is submitted before the Ministry;
  • prior authorization: applicable to renewable energy electricity production installations with an installed capacity, per site or group of sites owned by the same operator, exceeding 2MW. 

Last modified 10 Feb 2021

Legally speaking, yes it is permitted. However, because the national utility company manages the national grid and distribution, it is difficult to sell electricity directly to an end-user without the involvement of the national utility company.

Last modified 1 Feb 2021

A licence is only required for supply to low-volume users (i.e. max 3*80 A). In case of a Corporate PPA, therefore, no permit will be required.

Last modified 16 Dec 2020

No text yet.

Last modified 16 Dec 2020

The electric power generator must have a generation concession. The electric power generator may not contract with free users and distributors more power or firm energy than its own and those it has contracted with third parties.

Last modified 16 Dec 2020

Yes.

In terms of the Electricity Regulation Act No. 4 of 2006 ("ER Act"), subject to certain exceptions (see below), a licence issued by the National Energy Regulator of South Africa ("NERSA") is required to operate any generation, transmission or distribution facility, import or export any electricity, or be involved in trading electricity.

There are exemptions to the requirement for obtaining a license, and we have set out some of the more notable examples of the exemptions below.

If a generation facility (i) does not have a point of connection to the national grid (e.g. a captive own use facility), (ii) is for the sole purpose of providing standby or back-up electricity (for a duration not longer than a supply interruption), or (iii) is connected to the grid and does not have a generating capacity of greater than 100KW (subject to certain additional administrative requirements), it does not require registration with, or licence from, NERSA.

While a licence is not required, a generator must, in certain circumstances, nonetheless register with NERSA, including:

  • Generation facilities with an installed capacity of no more than 1 MW which are connected to the national grid and (i) supply to a customer or related customers with or without wheeling of that electricity through the national grid, and (ii) the generator complies with the grid code and has entered into a connection agreement with the holder of the relevant distribution licence.
  • Generation facilities that produce electricity from waste or the residual product of an underlying industrial process where (i) the generation facility is operated solely to supply electricity for consumption by a customer who is related to (or an affiliate of) the generator or owner of the generation facility, and (ii) the generator complies with the grid code.

 

Last modified 16 Dec 2020

Yes. According to the Electric Sector Act several licences/permits are required to generate electricity, covering the project, the construction and the operation of the power plant.

However, no specific licence or other form of authorization is required in order to sell electricity. Nevertheless, the suppliers are required to submit a communication and a responsible statement to the competent authority before the start of their activity.

Last modified 16 Dec 2020

Electricity is transported to the end user by the grid companies referred to above. The grid companies do not necessarily need to be a state or municipality entity but can be a private company. However, a grid owner must have a permit, known as a grid concession, from Ei in order to build and operate high-voltage power lines. The grid concession will also contain an obligation to connect electricity plants in the concession area.

It may be noted that it is not permissible under law for one and the same entity to both sell electricity and own and operate a grid.

Last modified 16 Dec 2020

Generators are ordinarily to sell to the single off-taker only. However, generators may be permitted to sale directly in areas with no connection to the national grid or a “generation for own consumption” where the entity generates the power for its own purposes.

Last modified 9 Feb 2021

No.

Last modified 21 Jan 2021

Direct selling is in principle permitted in GB. The activities of generation and supply of electricity, however, require a licence, although de minimis exemptions for both are available which may apply to small scale generators.

All licenced generators are subject to the Electricity Generation Standard Licence Conditions (SLC). Exemptions can be granted for on a class or individual basis. Individual exemptions may be granted by the Secretary of State (acting through BEIS) under s 5(1)(a) of the Electricity Act 1989.

Schedule 2 to the Electricity (Class Exemptions from the Requirement for a Licence) Order 2001 sets out four licence exemption classes for generation:

  • Class A applies to persons who operate small generators which provide less than (i) 10 MW capacity or (ii) 50 MW where a generation has a declared net capacity of 100 MW;
  • Class B applies to persons who generate power from offshore generators, provided that these only supply electricity to offshore installations;
  • Class C applies to persons who provide power from generators connected to the grid on 30 September 2000 and are not normally capable of exporting more than 100 MW; and
  • Class D applies to persons who do not provide power except from generators connected to the grid on 30 September 2000, provided that the generators are not subject to central despatch.

Last modified 16 Dec 2020

Direct transactions are permitted in some locations. Independent power producers typically must obtain certain permits or make certain filings in connection with the generation and sale of power as well as environmental and land use considerations at the project site. Requirements may apply at both the federal and state level and vary widely by state and county.  

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