PPAs promise second life for German wind farms
The anticipated wave of power purchase agreements (PPA) for electricity generated by wind farms that are leaving Germany’s 20-year support system is now under way.
In 2020, 4.4GW of German onshore wind will have dropped out of the 20-year support system, with the capacity rising to about 16GW by 2025. Once support expires, wind farm owners can either close down the project, or sell their electricity into the market.
Smaller German onshore wind farm operators generally do not have the means to participate in wholesale electricity markets and lack the financial resources to ride out fluctuations in wholesale electricity prices. But the first two PPAs for electricity from projects leaving the guaranteed price support system indicate the wind sector has found a way to ensure 20-plus-year-old wind assets can continue to operate outside the state support system.
Green electricity company Greenpeace Energy has signed Germany’s first PPA for direct supply of private customers, with wind-generated electricity from citizens’ wind farm Ellhöft in Schleswig-Holstein. The five-year PPA for electricity from the six AN Bonus 1.5MW turbines runs from 2021, after renewable energy act (EEG) support for the 9MW site expires at the end of 2020.
The fixed price can be adjusted to reflect the electricity wholesale market price shortly before the contract kicks in. During the contract period, the price can be lowered or raised if the wholesale electricity market price exceeds or falls below a price corridor to spread price risk between the contract partners, said Greenpeace Energy.
“Many older wind farms are in technically good shape and can help Germany reach its climate targets,” says Reinhard Christiansen from the special purpose vehicle (SPV) Windpark Ellhöft GmbH & Co. KG. “But this is only possible if the operators have a reliable income to cover operation and maintenance, which is guaranteed by the new type of PPA. The contract protects us from fluctuations in the wholesale electricity market price, and we are convinced that many wind farm operators will follow our example,” he says.
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