SIMPLIFICATION AND CLARITY TO GROW RES STARTING FROM PPA
By Francesco CALABRETTA – Country Manager Italy, Audax Energia
"Simplification" And "clarity". Here are some of the most used words – if we remove those related to the medical-health universe – in this exceptional and difficult 2020.
There is a belief from many quarters that in order to reconnect the interrupted or suspended thread of activities during the lockdown period and avoid further economic and social disruptions in the months ahead, it is necessary and urgent to identify more efficient and effective ways of "doing" and "deciding". Starting fromenergy and the promotion of sustainability policies related to it.
In June, RE-Source, an association of global industry groups interested in renewable energy, addressed a letter to the governments of the Member States of the European Union. The occasion was to make their voices heard in view of the discussion on the Continental Plan to support the economy, calling for clarity on how to use the 750 billion euros of the Recovery Plan, especially with regard to investments in sustainability. Among the requests, the first concerns the establishment of a political and regulatory framework that allows for facilitated use of instruments such as corporate PPA, Power Purchase Agreement.
In fact, although they are valuable tools for the development of renewable energy sources (not hydroelectric), they are often difficult to use, slowed down by the lack of regulatory simplification and the presence of bureaucratic barriers.
Yet the construction of new clean energy generation plants should be a priority and not just one of the options. And the European Green Deal policy launched in January is also based on this principle. Furthermore, if we want to fight the climate change and respecting the commitments made to reduce emissions, it is essential to facilitate the construction of wind and photovoltaic parks. To be clear: between now and 2030, 826 GW are currently planned for new non-hydro renewable energy plants, with investments estimated at around 1,000 billion dollars. However, if we want to stick to what was decided in the Paris climate agreements, at least 3,000 GW would be needed… The deficit is evident and not negligible (UNEP-BNEF Report 2020).
In addition to the environment, there would be a positive effect on the economy. Investing in renewables means creating new business opportunities for companies and generating employment, even in the short-medium term: essential elements if you want to recover what you will lose in terms of GDP and, consequently, decreased income.
In Italy the RES sector is growing. According to the IREX Annual Report, in 2019 there were 211 operations for a total of 10.2 GW of power and 9.5 billion euros in value. In particular, it is worth highlighting the renewed interest in new plants or projects: 51% of the operations (in 2018 the percentage was 27%) concerned this type of intervention. A progress that reflects the state of health of a sector that has regained dynamism and that has undoubtedly benefited from the so-called FER1 decree.
Unfortunately, positive performances are often watered down or slowed down by an obstacle that is as old as it is difficult to eliminate: the excessive bureaucracy that causes more than half of the projects surveyed in Italy to be at a standstill, blocked and waiting for the necessary authorizations. An apparatus that Jacopo Giliberto on the Sole24 Ore he defines it as "a public administration that suffers from authorization gastritis, regulatory obesity, compulsive rhetoric".
An already complicated situation that, without corrective measures, could become unsustainable for the entire sector. With the risk that the most significant investments – in terms of value and size – will no longer be destined for our country, but for markets with less cumbersome mechanisms. Unless the shock – including cultural – generated by COVID-19 can finally change what exists today, starting with the simplified use of financial instruments capable of creating the conditions for large-scale investments, such as those for the construction of a renewable energy generation plant. And Let's go back to the PPAs.
In 2019, the highest volume of long-term power purchase agreements for companies (Corporate PPAs) was recorded: 19.5 GW. In Europe alone, new PPAs for renewable projects reached 7.5 GW, marking a +2.6 GW compared to 2018. Scandinavian countries remain among the top users. The United Kingdom follows, while Spain continues to grow.
Audax Renewables In this it was among the first European companies to believe in PPAs. From 2017 to today it has signed agreements for over 1.7 GW, activating strategic partnerships with entities such as Trina Solar, WeLink, Innogy, Statkraft, Cox Energy. The validity of the strategic direction taken is confirmed by the results: the company has closed the first quarter 2020 with an increase in gross margin of 3.2%, an EBITDA of 12 million and a profit of 1.4 million euros.
Jose Elias, president and founder of the Group, had claimed it in an interview released at the beginning of May, in the midst of the coronavirus emergency: "we are one of the few companies that are building photovoltaic systems right now, in the midst of the crisis without suffering excessive consequences".
Now, out of the darkest period and hoping for the establishment of a simplified and efficient regulatory framework, we have the duty to insist on this line of development.
