Solar firms 'have to develop their capability' to navigate Europe's PPA market

• European PV asset owners need to ensure they have the ideal abilities and knowledge to effectively operate in the continent's power purchase arrangement (PPA) market, according to panellists speaking today at the Solar Finance as well as Investment Europe meeting.

Smaller sized designers may be left out altogether from participating in the continent's PPA section, stated Dierk Paskert, CEO of German independent power producer Encavis: "I don't assume that really everybody on the market that holds a possession today or is creating a property is additionally after that certified to take PPA threat, since what you ultimately need is an annual report to take counterparty danger."

While business demand for renewable resource handle Europe gets on the rise, Paskert stated that for "the huge majority of designers in solar-- which are small-sized firms, often only very little business without annual report-- I do not see exactly how they can contribute in the PPA market."

He added that developing an ability "will certainly be very important in the future due to the fact that there are lots of, lots of dangers in PPAs". In a move to reinforce its understanding, Encavis has actually invested in Pexapark, a renewables software program company that uses quantitative analysis to price, evaluate, resource and also handle PPAs. A recent Pexapark report located that Europe's PPA market got rid of the COVID slump to post document numbers in 2020. Greater than 8.9 GW of renewables PPAs were reported in the continent last year, with solar leading the technology mix.

Armin Sandhoevel, CIO of facilities equity at Allianz Global Investors, echoed phone calls that business need the best expertise to secure against dangers. "I would not claim there is really a big distinction in between the PPA fact and also the feed-in tariff reality. What is transforming is the risk schedule," he said.

" We are exchanging governing threat with counterparty risk, as well as I fully concur that you need to be well gotten ready for that and that naturally you need extremely specific skills also in your teams to deal with counterparty dangers."

Panellists in the discussion went on to contrast Europe's prospective compared with the US. Sandhoevel stated companies in the United States are much more familiar with PPAs as "they had no feed-in tariffs systems there, they were competitive from the start".

Research study published last week by BloombergNEF discovered that the United States was once more the biggest corporate PPA market in 2020, however was much less leading than in previous years, with Europe starting to make considerable gains.

According to Giovanni Terranova, handling partner at Bluefield, the company PPA market in Europe "has not removed for various reasons, regulative but additionally companies are not prepared yet. The majority of PPAs have been become part of with investors ... we see this as a continuous pattern.

" I think that these investors are better placed to act in between the corporates and also the generators, since we as generators or investors, we do not have possibly the skillset as well as the performance history of handling the corporates."

While countries throughout Europe are counting on renewables public auctions to assist support clean power deployment, Terranova thinks there must be more clearness from federal governments on whether they plan to press as well as facilitate PPAs or continue to execute public auctions. He stated it's essential to have quality as "the mix of the two can produce some problems in the medium/long term."