After supplying electricity to French retailer Boulanger, SNCF public and mutual credit financial services, solar developer Voltalia has secured its fourth agreement for an unsubsidized solar installation in France. The French developer will supply Auchan Retail with the energy produced in two solar installations with a total generating capacity of 61 MW in the south of the country, as part of a 20-year power purchase contract (AAE) signed by the energy consumer. The contract concludes with agreements for a 5 MW solar production capacity with Boulanger, a 150 MW contract with the railways and a 10 MW agreement with the lender Credit Mutuel with these three 25-year PPPs. When a statutory subsidy to an existing plant expires, AAEs are a means of providing follow-up funding for the operation of the facility. This could include operating costs such as maintenance and leasing. Voltalia has been awarded a 25-year power purchase agreement by French retailer Boulanger for electricity generated from a 5 MW project. The buyer also committed to purchase electricity from new wind and solar installations to be operated by the French developer. Electricity producers enter into AAEs either bilaterally with a consumer company (“Corporate PPA”) or with an electricity distributor who purchases the electricity generated (“Merchant PPA”). The electricity distributor can continue to supply electricity to an electricity consumer (transform it again into a “corporate PPA”) or to negotiate electricity on an electricity exchange. Many international groups are already buying shares in their electricity consumption via AAAs or have announced their intention to do so more frequently (see there100.org/re100). They use AAEs to obtain stable and predictable electricity prices. AAEs are an effective way to reduce the risk of electricity prices, particularly for operators of high-investment and low-cost facilities (such as photovoltaic and wind power plants).
Since electricity payments are already insured to some extent, facility managers and financial banks may be more confident that revenues from the sale of electricity will effectively cover investment costs. This makes the project more cost-effective in the long run. Another AAE was recently signed between French renewable energy company Akuo Energy and Internet company Qwant, but it was unclear whether Solar would be part of the agreement. In November, the French energy cooperative Enercoop submitted a request for a proposal for the selection of solar and wind projects with a maximum size of 10 MW, which would allow it to sign an AAE in the long term. Depending on the regulation and market environment, different situations may occur, in which AAEs are a favourable form of financing or a stabilizing factor in long-term delivery. In some countries, air-mining contracts are already being used to finance the construction (investment costs) and operation (operating costs) of renewable energy facilities.