Power Purchase Agreements for your rooftop PV system
Full power remuneration
Your rooftop PV system produces more electricity than your company can consume? Since the changes to the German Renewable Energy Act (EEG) in 2021, the feed-in energy payments in the up to 750 kWp system segment are now limited: you get remunerated for a maximum of 50% of your generated electricity. However, as a system owner and operator, you can still use your surplus electricity to earn income with a long-term contract to supply electricity: a Power Purchase Agreement (PPA). By doing this, you secure the maximum possible remuneration.
EEG 2021: maximum 50% remuneration for systems up to 750 kWp
With the revision of the German Renewable Energy Act (EEG) in 2021, the remuneration for PV systems with and without own consumption has changed towards the selling of surplus electricity. The main losers are owners of systems with capacities between 300 and 750 kilowatt-peak (kWp): in accordance with § 19 EEG 2021, they are remunerated for only a maximum 50% of the generated electrical energy. This means: if the plant operator consumes less than 50% of the created electricity itself, then the difference is not remunerated (see Figure 1).
Power Purchase Agreements for commerce and industry (C&I)
Are you affected by the remuneration cuts for the above-described system segment? Or do you have a roof surface that permits larger system capacities (>750 kWp)? The solution for commerce and industry is long-term electricity supply and purchase agreements – Power Purchase Agreements (PPA).
No worries about marketing, levies and fees
PPAs can be configured to be very fruitful sources of income. All operation types share the following features: a producer and a customer trade quantities of electricity – directly (sleeved PPA) or through an intermediate third party (synthetic PPA). The PPA sets out the conditions of trade in terms of e.g. a fixed price per kilowatt-hour or a price window, the trading time period and the quantity of green electricity supplied.
Marketing, levies or fees incurred in matter the customer: an electricity trader on the power market sells the purchased quantities of electricity or supplies them directly to a third-party off-taker.
The advantage for producers and off-takers: the producer relies on the contracted rate and receives a stable income defined by the rules. The buyer profits from competitive and stable electricity prices, knows the origin of the generated electricity and can, with certified green electricity, demonstrate his sustainable approach leveraging the decarbonization amidst the energy transition.
Alternatives for implementing your project
Variants for determining the size of your photovoltaic system and marketing the generated electricity in PPAs:
1 – Reduce system output to own consumption, limit surpluses
SENS experts accurately design your system so that its output is scaled down to your current energy consumption, limiting surplus electricity to an amount that is not affected by the remuneration limits. In case of systems over 300 kWp, the designers can optimize size and load profile to ensure that the difference between the produced electricity and the own consumption is below 50% of the total amount of electricity generated.
2 – Installation in stages for keeping your investment profitable
In Germany, the EEG (Renewable Energy Sources Act) makes it inadvisable to install the full installable capacity on a roof surface. Therefore, people are motivated to stay below the limit and not install 300 kWp or more within 12 months. For this reason, the installation is spread over several years until the full size of the roof area is reached.
Undersizing the PV system to avoid feeding energy into the grid
A PV system can also be designed to avoid feeding energy into the public grid: no feed-in remuneration is received. In this case, you must sign a waiver. This alternative has the fastest payback: energy savings can reduce your energy bill.
3 – Remuneration via PPAs
- a. Off-site PPA: fixed supply price, fixed time period, long-term price security
With an off-site PPA (supply to a location off-site), the producer sells his electricity to a service provider at a fixed price and over a time period of up to 15 years. So that uncertainties in estimates with regard to consumption and production are minimised for the service provider, no or very little own consumption is permitted. The electricity is either sold on the power market or directly to third-party off-takers.
- b. Off-site PPA with own consumption: 2 systems to allow feed-in and own consumption
The off-site PPA model with own consumption works as in variant (a). Larger systems with own consumption can be split: an own consumption system is installed in addition to the PPA feed-in system.
- c. On-site PPA with or without residual electricity supplied to the grid: electricity from the producer to the service provider
In on-site PPAs, the system owner does not feed the electricity produced into the public grid but sells it directly to a service provider. The service provider supplies immediately usable quantities to the consumer (at the same location). The service provider compensates any deficits by supplying the missing electricity to the user (for example by purchasing green electricity on the market) and sells in the market any surplus generated energy. Depending on the parameters of the PPA, differences in charges and levies may arise, which have to be agreed individually.
Good reasons for PPAs:
- Cheaper electricity from own roof compared to purchase from others
- Generation of green electricity with regional guarantees of origin
- Supply of additional quantities as grey or green electricity possible
- Direct decarbonisation effect
- Long-term price security: risk reduction from electricity price fluctuations
- One contact partner for all matters concerning electricity purchase and sale
- Increased administration costs compared to EEG remuneration only (finding suitable partners & drawing up individual contracts)
- Third-party involvement
- The market in Germany is still in the development stage (own consumption with sale of surpluses not always possible)
Practical examples of different PPA structures
Die folgenden PPA-Anwendungen sind kombinierbar.
1 – Building owners/suppliers with on-site PPAs do not supply their electricity to the public grid but to an aggregator or service provider and consume part of it themselves.
2 – If the owner produces surplus electricity and feeds it into the public grid, then the service provider sells it through an off-site PPA.
3 – A corporate purchaser of green energy with an off-site PPA is supplied with the fed-in electricity from the public grid (managed in most cases by a service provider).
4 – Residual electricity from the public grid is supplied to the building owner/supplier.
PPA financing models with future potential – we can advise you!
A PPA enables a large roof-top system larger than 300kWp-cap to be financeable. It offers a way of securing your investment in the long term. We can help you openly and make it happen: we go alongside with you through all parameters to be considered for setting a PPA in place.
Green PPAs from STEAG
STEAG GmbH has also taken note of the growing demand for green electricity and is addressing this trend with "Green PPAs". The company handles the marketing and sale on the retail market or to end customers of green electricity produced by system operators. The purchaser of the green electricity receives a guarantee of its origin. This document provides the evidence that the electricity is 100% green, produced in Germany and does not cause CO2 emissions in Germany.
“We are responding to this future trend and plan to further expand our activities in the field of Green PPAs – this also applies to our own network with system operators and end customers,” explains Oliver Welling, Project Manager Green PPA at STEAG.
You can find out more about the topic of Green PPAs here.