Can communities sign PPA for their electricity purchases ?

Appeared ten years ago, PPAs – or Power Purchase Agreement – were first developed in the United States and in the Nordic countries. With only 500MW of PPA capacities signed since 2015, France is at the bottom of the peloton of European countries. The pace has been accelerating since 2019. In a context of rising electricity costs, the PPA seduces. tool for the energy transition, it strengthens the Low carbon policies.

At first chilly, communities are beginning to take an interest in this contract for the purchase of renewable energy at a fixed price. But can they sign PPAs? Is it compatible with the rules of public procurement? Find out what a PPA is, its advantages and how communities can seize it.

What is a PPA?

PPAs are contracts signed between a final consumer and a producer for the purchase of electricity from renewable energies. The consumer commits to Buy directly from the producer a quantity of green electricity over several years. He negotiates a fixed price throughout the duration of the agreement, from 5 to 25 years.

Also called Green Power Purchase Agreement, the PPA thus makes it possible to finance new production plants based on renewable energies.

There are several types of PPA.

Physical PPAs

Physical PPAs are contracts where the user consumes the electricity production he has purchased.

As part of Physical PPAs ‘ on-site‘  or ‘ on-site‘ , the consumer is directly connected to the green electricity production plant. This involves a geographical proximity. For some large PPAs, the producer builds and operates directly on site a facility dedicated to site consumption.

When energy production exceeds the needs, the surplus is reinjected into the public network and sold via regulated purchase rates. When production does not cover electricity needs, these are covered by the network. One Green PPA Complementary Can be signed to then benefit from green electricity produced ‘off site’.

As part of Physical PPAs ‘ offsite‘  or ‘ Off-site‘ , the consumer buys green energy on the wholesale. It consumes the electricity produced by a photovoltaic, wind or hydraulic installation not defined upstream. Its production is injected into the public network and the supplier orchestrates its delivery to the various buyers. The same plant can supply several customers with green electricity.

Financial PPAs or Virtual PPAs

In the context of financial or virtual PPAs, the user does not consume the green electricity that he has purchased. It continues to source from the public network but Its consumption is offset by the original guarantees from which he benefits via his PPA. The original guarantees state that for 1 kWh of electricity consumed, 1 kWh of green electricity is injected into the network.

Why sign a PPA?

PPAs are tools for energy transition that allow decarbonize la Electricity consumption.

PPA offers many advantages:

• its predefined and stable price over time ensures the Visibility of energy costs in the medium and long term. A significant advantage over the volatility of electricity prices.
• it allows Control your energy bills, in a context of rising carbon electricity prices and falling green electricity production costs.
• he secure supplies. On-site physical PPAs promote self-consumption and energy autonomy.
• he guarantees traceability and the origin of electricity.
• he Reduces CO emissions₂ .
• indirect investment in renewable energy plants, it allows support the development of the green energy sector.

PPAs compatible with public procurement?

There are no legal contraindications to the signing of PPA by the communities. The principle of contractual freedom authorizes them to carry out private law arrangements, subject to respecting the rules of public procurement.

Towards an adaptation of public procurement rules?

Public procurement is based on the Competition principle. Contracts must be regularly returned to competition, which is incompatible with the long duration of PPPs.

A second question arises in relation to this principle: should we Compete with PPAs with classic offers Suppliers? It is indeed impossible to trace the electricity and to guarantee that the electricity needs are covered by the producer with whom the community has signed a contract.

For Cécile Fontaine, head of the legal department of the National Federation of Licensing Authorities and Authorities, Competition does not seem necessary, since PPAs have specific characteristics (price, duration, commitment of the parties). She explains: “Public buyers should be able (…) to use PPAs (…) Subject to making sure that the characteristics specific to this type of assembly appear in the consultation parts in relation to the classic supply offers. »

shy first steps with short-term PPAs

To allow everyone to access PPAs, the supplier ENGIE has developed a PPA offer for all. Those are short-term PPP. Green electricity is purchased from already depreciated production facilities, which makes it possible to offer shorter contracts.

A shy first step was taken End of 2020 by Sipperec (Intercommunal union of the outskirts of Paris for energies and communication networks). It brought together 63 communities in Île-de-France to buy wind energy in Engie over 4 years. ‘ With the signing of this PPA in the short term, we buy electricity with real original guarantees on French installations that we have clearly identified. explains the energy engineer in charge of the contract.

Communities and PPA can therefore rhyme. Also on condition for the communities of Regroup to achieve consumption quantities suitable for a PPA.

Yes, local authorities can sign PPPs, subject to respecting the principles of public procurement. But it is a complex assembly that induces a complex consultation procedure and requires advanced skills. Recently, communities have, through their associations, affirmed their desire to be able to contract PPAs. The APVF (Association of Small Towns of France) and the AMF (Association of Mayors of France) militant For a simplification and adaptation of public procurement for energy purchases. To see if the State will support them in this approach in favor of the energy transition.

Sources:

Numbers:

https://media.opera-energie.com/publication-cre-analysis-dynamics-ppa-europe/ / https://www.cre.fr/actualites/developpement-des-contrats-de-type-ppa

PPA:

https://www.engie.com/page-thematic/ppa-power-purchase-agreement

https://www.engie.com/news/ppa-power-purchase-agreement-cest-quoi

https://plum.fr/blog/entreprises-collectivites/power-purchase-agreement-ppa

https://opera-energie.com/solutions-energie-green/power-purchase-agreement-ppa/

PPA and Communities:

https://www.actu-environnement.com/ae/news/hausse-prix-electricite-strategie-collectivte-39001.php4