In the first half of 2018, Norway and Sweden saw corporate wind PPAs signed totalling almost 1.4 GW – a figure equal to the all the corporate PPAs signed in Europe in the whole of 2017, according to the findings of the report ‘Europe’s PPA Revolution’, contained in A Word About Wind’s Finance Quarterly Series. The report contains the latest analysis published exclusively for its rapidly expanding international membership of energy developers, financiers and investors.
The quarterly investor report series also provides an exclusive insight into key M&A transactions, data on the most notable deals of the past three months, economic country forecasts and unrivalled investment analysis, four times a year. A key focus of this edition is the Scandinavian market, and particularly the question of just how countries like Sweden and Norway have managed to attract heavyweight corporate buyers, such as Facebook and Alcoa, to sign PPAs of such significance.
According to A Word About Wind’s analysis, three main reasons lie behind Scandinavia’s PPA success: demand from data centre operators, stability and cost.
For example, in May, Facebook signed a PPA to buy the energy produced by three Norwegian wind farms, under development by German investor Luxcara, which total 294 MW. A large proportion of the energy will power a data centre in Odense in Denmark. And Facebook is by no means the first to harness wind power for this reason – other tech giants, such as Google, have long been using renewables PPAs to power their data centres.
Scandinavia has proven to be a popular location for these data centres due to its predictable wind speeds and cool climate, which helps the centres to run smoothly – and its proximity to major nations such as Germany, the UK, and the Netherlands.
However, while an important contributor to the rise of the corporate PPA in Scandinavia, data centres are not the only reason: stability and costs are also important. The Norwegian and Swedish governments have cut energy taxes and strongly supported new renewables, including onshore wind farms that vie for the title of largest onshore complexes worldwide, such as the 4GW Markbygden.
In addition, low power prices enhance the allure of the Scandinavian market, both forcing developers to seek long-term PPAs in order to achieve much-needed revenue certainty, and attracting multinational corporates with the promise of long-term, cheaply priced power.
“Scandinavia has led Europe when it comes to winning power deals with corporates in recent years” said Richard Heap, Editor, A Word About Wind. “This has helped Sweden make great progress to achieving its 2030 renewables targets 11 years early. Now we need a PPAs revolution across Europe. In a low- and no-subsidy world, investors will see PPAs as a key way to take schemes to financial close. However, too many countries in Europe have barriers that will stop that happening. The EU last month challenged member states to find what those barriers are and eliminate them. That’s a good step, but it’s up to the countries to deliver”.
In addition to this report, A Word About Wind will be looking at this topic during its annual Financing Wind Europe conference in London on 1st November 2018.
The investor report contains a corporate M&A databank, commentary on the rise of wind-powered data centres, and a comprehensive offshore activity tracker that looks back at the most significant stories in the offshore sector globally.
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