Monday, September 25, 2023
HomeFinanceThe increasing popularity of PPAs: new agreement signed in Poland

The increasing popularity of PPAs: new agreement signed in Poland

Tion Renewables signed a virtual power purchase agreement (PPA) for the sale of its renewable energy to Saint-Gobain, a world leader in light and sustainable construction, over a 15-year period. The expected annual electricity production from the 20 wind turbines with an installed capacity of approximately 52 megawatts (MW) amounts to approximately 190 gigawatt-hours (GWh), making it one of the largest PPAs of this kind ever signed in Poland. The produced electricity equates to the annual power consumption of around 100,000 average Polish households.

Under the terms of the contract, 100 per cent of the electricity produced by Tion’s wind farms will be sold on the market and virtually settled with the purchaser at a guaranteed fixed per-MWh price, including annual step-ups of 2.5 per cent consistent with the Polish Central Bank’s long-term inflation target. The contract will commence in January 2025 and it will contribute to Saint-Gobain’s goal of becoming carbon neutral by 2050. The contract will cover nearly 45 per cent of Saint-Gobain’s electricity needs in Poland. It will reduce CO2 emissions by 135,000 tons per year, thereby reducing nearly 20 per cent of Saint-Gobain’s scope 1 and 2 emissions in Poland and 4 per cent of Saint-Gobain’s scope 1 and 2 CO2 emissions in Europe.

“The signing of this agreement, important for the Saint-Gobain Group in Poland, is proof of the consistent implementation of our purpose Making the world a better home and the Grow and Impact strategic plan, to care about people and the planet,” commented Joanna Czynsz-Piechowiak, CEO of Saint-Gobain Poland and Ukraine. “As market leaders in sustainable construction, we want to show the direction of the necessary changes in energy sources. Through these and other activities, we will systematically reduce the impact of our industrial activities and manufactured products on the natural environment.”

For Tion, this contract represents proof of concept for the use of long-term corporate PPAs as an efficient tool to accelerate the energy transition, while at the same time ensuring stable revenues for electricity producers.

“A clear trend is emerging in which PPAs, although still relatively new in the market, are becoming an increasingly popular instrument to support the energy transition in today’s challenging economic situation,” said Agnieszka Kulińska, who leads the Renewable Energy Sources team within Dentons’ Energy group in Poland, who advised Tion on the agreement. “We are currently advising several clients with regard to PPAs.”

“This was a very successful project, which demonstrates Dentons’ ability to support clients throughout the energy transition process, which is so vital for Poland today,” added Michał Motylewski, Europe Energy Practice Development Counsel. “Advising Tion on their projects is always a pleasure, and we appreciate the client’s ongoing trust. We are also happy to see the positive impact that PPA-supported projects are having on the rapid development of renewable energy sources in Poland.”

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