Origination
The value chain element Origination relates to the optimisation of the production of electricity from third-party renewable energy as well as direct marketing and energy management for industrial and business customers. This includes the trading and marketing of standardised and structured products in various countries. The aim is to help our partners meet their cost efficiency and sustainability goals, with a view to increasing customer benefits and creating value. Moreover, Origination comprises the Swiss sales and origination business as well as retail activities in France.
Spotlight: How Power Purchase Agreements promote the transition to cleaner energy
In 2023, Alpiq signed several Power Purchase Agreements (PPAs) in the Scandinavian markets. What are PPAs and how important are they to Alpiq and its sustainable energy business? We asked Matti Ahtosalo, Head Northwest Europe in Alpiq’s International division, for answers.
Matti, what are PPAs and what role do they play?
PPAs are “Power Purchase Agreements” used in the renewable energy business. PPAs are long-term contracts between a power producer and a power offtaker. They play a crucial role in the energy transition towards a carbon-neutral future. Through PPAs, we find long-term solutions that on the one hand guarantee our client a carbon-free electricity supply and on the other hand facilitate the integration of renewable energy sources into the electricity market by guaranteeing offtake. For both parties, PPAs often provide price stability and budgeting certainty.
How does this work?
Well, it is actually quite easy. With long-term contracts, which can range from around five to 25 years or even longer, the producer can be sure that the energy produced finds an offtaker according to the agreed terms. Such contracts provide revenue certainty to the producer, thereby reducing financial risk. On the other hand, long-term contracts help the offtaker to meet sustainability and environmental objectives by ensuring a fully renewable electricity supply over the term of the contract. This also provides stability. This is why PPAs play a significant role in the growth of renewable energy projects. Because without them, projects like wind farms would never be built.
PPAs play an important role in the Nordics. Is this because other subsidy schemes are less common there compared to other regions?
PPAs are not a form of financial subsidy or direct financial support from the government or any other entity. They offer a market solution instead, i.e. a market-based mechanism helping renewable energy project developers to secure long-term revenue and consequent funding that will make their projects financially viable. PPAs are a popular solution for wind farm projects in the Nordics and for solar projects in Spain – which is hardly surprising given how windy it can be in northern Europe and how often the sun shines in Spain!
Matti Ahtosalo
Head Northwest Europe, Alpiq
Why does being a party to PPAs matter to Alpiq?
Through our sustainable energy business, we want to contribute to a better climate and improved security of supply. PPAs allow us to do this on various levels. We support the other party on their journey to achieving their sustainability goals, which very often equates to carbon neutrality. At the same time, Alpiq is able to improve its sustainable energy business. We can gradually expand our renewable energy portfolio, support integration into the market with our powerful and flexible hydropower assets in Switzerland and therefore contribute to enhanced security of supply. We act as an enabler. We do not own any specific wind farm in the Nordics, for example. But we do our utmost to ensure that our customers get the green energy they need towards achieving carbon neutrality at their production facilities. We don’t just talk, we act.