Energy purchase and corporate PPA
To switch the energy mix to renewable energies, there are three solutions, more complementary than competing:
- the purchase of guarantee of origin (certificates attached to the production of renewable energy),
- self-consumption on site,
- the corporate PPA (‘Power Purchase Agreement’).
Orygeen is the exclusive partner of the Solvay group, through its subsidiary Solvay Energy Services (SES), the gas and electricity supplier for the industry and aggregator/marketer of renewable electricity on behalf of local producers. Together they offer companies the possibility to attain their goals of lowering CO₂ emissions, all while controlling their energy costs.
The purchase of guarantee of origin (GO)
Certificats linked to the production of renewable energy, guarantee of origin exists in Europe for electricity and gas (RECs and IRECs exist in most countries in the world).
While their flows are reasonable and the available volumes are significant for electricity, with a purchase cost of approximately 10% of the price of electrons on the market, they are rare and expensive for gas (as expensive or even more expensive than the gas molecule).
Not always linked to the creation of EnR, origin guarantees of origin don’t necessarily generate additionality (linked to a new investment increasing the capacity of renewable energy plants).
Self-consumption of renewable energy on site
On-site electricity and renewable heat generation solutions are mainly used on self-consumption. Their use in a strategy to change the energy mix is limited by:
- the capacity available on site (available space in the case of solar, access to resources in the case of the cogeneration biomass or geothermal),
- the profitability compared to the price of energy bought on the network.
The competitivity of self-consumption depends on the size of the installation, but also the access to the resource (level of sunlight, depth of the geothermal layer, distance and price of the biomass…).
The corporate PPA
A PPA is long term renewable energy purchase agreement, directly between a renewable energy producer and a consumer company.
The company commits to a renewable energy developer for the purchase of a volume of energy set at a predetermined price (fixed, indexed, restricted, etc.) over 5 to 20 years. In return, it receives the energy produced as well as the guarantee of origin associated, participating directly to the creation of new renewable energy assets. PPAs that are signed for the supply of heat, are especially being developed in wind turbine and solar electricity areas.
The increasingly complex energy buying strategies
One of the challenges of energy purchases is market volatility. The energy costs of a company vary often in function to the volatility of the market and the purchasing price of energy rather than as of the result of the company’s actions of energy efficiency.
Effective purchasing policies seek to buy energy at the best moment while diversifying the risk.
Procurement strategies must be designed by simultaneously integrating environmental objectives, risk management and operational necessities.
The purchase of energy is a new area of expertise which one would be naive to reduce to simple knowledge of the market suppliers, the development of tender and contract negotiation.
Aware that an efficient energy procurement policy rest on the definition of an adapted strategy, the tracking of markets and the ability to make decisions at the right moment. Orygeen assists its clients in order to define a strategy for sourcing and purchasing energies, and negotiating corporate PPA.
Identify suitable suppliers
Monitor an invitation to tender
Lead the contractual negotiation
Integrate the supply of EnR in the procurement of gas and electricity
Supervise then optimise the contract of procurement