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Who will buy the sun?

07 May, 2021

Solar PV needs financing to grow fast. Power purchase agreements offer a solution.

According to Statkraft's Low Emissions Scenario 2020, solar PV will be the largest source of power generation from 2035. But how are new development projects financed? Power purchase agreements play an important role in enabling the construction of new solar parks and in reaching the 2035 scenario.

Solar power plant seen from above in green field
  • Development costs for new power plants are falling.
  • Meanwhile, nations are transitioning out of subsidy schemes.
  • The construction of new plants still requires complex financing.
  • This is where power purchase agreements come in: they enable the financing of additional, new solar parks without subsidies by securing a revenue stream for the developer with the following steps.
solar plant in Emmen seen from below
  1. A power offtaker agrees to purchase power from a plant that goes into operation in the future.
  2. Typically, a long-term contract is concluded.
  3. The project developer now holds the guarantee that the power from the plant will be sold at agreed conditions such as price and volume.
  4. This serves as a security to investors and banks for financing.
Patrick Koch portrait
"There will be fewer and fewer subsidies or feed-in tariffs in the years to come. Investing in renewable plants will be cheaper, but the need for predictable revenues remains the same. Renewable energy producers must ensure a consistent level of income to guarantee short- and long-term profitability for their plants, and banks and investors will continue to demand a certain level of income and planning security. We therefore expect the number of PPAs to increase in the future."
Patrick Koch
Head of German Origination

In Spain, one of the sunniest countries in Europe, Statkraft and BayWa r.e. have concluded several PPAs including in 2018 for the very first subsidy-free park in the country.

Read more

In southern Germany, Statkraft and Anumar have concluded a solar PPA for the largest solar park in Bavaria which went into operation in October 2020.

Read more

For corporates, industry and energy suppliers, the possibility to buy green energy from solar and also wind power plants in the market allows them to reach sustainability targets in unprecedented ways.

While looking to secure their green power supply they can even choose specific power plants for example from a particular region and country.

As an international energy trader and project developer, Statkraft can offer tailored green energy solutions that fit the exact needs of energy buyers: project size, location, contract duration, risk appetite. Statkraft's offering is among the broadest available in the market: from as-produced to real-time delivery, new or existing assets.

Companies such as Bosch and Mercedes-Benz and energy suppliers like Naturstrom in Germany have concluded power purchase agreements including solar power with Statkraft.
"Statkraft has a leading position in Europe in the direct supply of industrial customers with power from non-subsidised renewable assets. Operation without subsidies is often possible when market-oriented action, targeted marketing and efficient plant operations come together."
Carsten Poppinga
SVP Trading & Origination in Statkraft and Managing Director for Statkraft in Germany
The way ahead is to bring together electricity producers and companies from trade and industry throughout Europe: No one will actually buy the sun but by working together we can harness its ever-renewable power and make it available to you.
Woman smiling
Judith Tranninger
Head of Public Relations