On the road to renewable power purchase agreements

The growing emphasis on sustainability is accelerating the energy transition in many countries around the globe. To meet the needs of businesses and consumers, Axpo Italia has launched its new ‘Green Route’ offering, enabling the use of 100% clean and sustainable energy while also promoting the development of renewable energy sources.

One of the most innovative solutions for achieving the transition to a lower-carbon economy, corporate Power Purchase Agreements (PPAs) are tailor-made long-term agreements to purchase renewable energy. Axpo has been a European pioneer and leader in this field for many years as an increasing number of renewable energy investors and producers sell their green electricity on a long-term basis to obtain investment and price security. In addition, large industrial energy consumers want to secure certified clean energy at fixed prices – and this is often done by means of a PPA.

Simone Rodolfi, Head of Origination & Business Development at Axpo Italia, explained: “When a business makes Corporate PPAs part of its sustainability strategy, they aim at signing long-term agreements to exclusively purchase renewable energy and renewables certificates produced by green power plants. Thereby, the company helps creating more renewable capacity.”

The sleeping giant has awakened

For a long time, Italy was considered a laggard when it came to PPAs with renewable energies. But now the trend is picking up speed in the land where lemons grow. Axpo Italia’s objective is to further promote PPAs in its home market and achieve a breakthrough in this promising business.

And its efforts are gaining momentum. In autumn 2020, Axpo Italia signed a Corporate PPA with Carcano Antonio S.p.A. Group, a European leader in the production of flexible packaging made of aluminium foil. One of the first multi-year contracts for the supply of renewable energy in the Italian aluminium sector, where the two companies lead, others are expected to soon follow.

Simone Rodolfi commented: “In Italy, too, there is a growing realisation that the time is ripe to break new ground. The deal we concluded with Carcano is kind of our country’s first success story in this new era – the sleeping giant has awakened, so to speak. At Axpo we have been working in this direction for a long time. After having already concluded numerous long-term PPAs with energy-intensive industrials throughout Europe, we now want to push this business on a broad basis in Italy as well".

Different shades of green

Axpo Italia has therefore decided to add a new strand to its strategy and product range with ‘Green Route’, a gradual, structured offering to facilitate access to corporate PPAs in Italy, and work towards the UN's climate goals.

The scheme offers varying shades of green. The first level is the supply of sustainable energy to businesses and consumers through Guarantees of Origin (GoOs), certificates issued to plants generating renewable energy across the country. The second level involves the supply of energy from a specific existing renewable source –wind or solar energy, for instance – which is chosen by the customer, usually with a geographic proximity requirement. And the third level is a PPA through which the company signs a contract to purchase energy produced by a specific solar or wind plant under development, thereby indirectly helping to finance its construction.

As part of the latter, which is an agreement that normally lasts for a decade, Axpo Italia guarantees the producer’s revenue for the energy generated for the entire length of the contract, facilitating access to project financing and ensuring bankability. At the same time, Axpo Italia supports the off-takers of the electricity produced by reducing their business’s environmental impact and exposure to energy price volatility.

Listening to the customer

Simone Rodolfi added: “Building these long-term agreements begins with listening to the customer's needs regarding type of renewable energy source and quantity desired. It's then a question of selecting the plant developer, setting the supply price and agreeing the contract structure. This formula allows our clients to diversify their energy supply portfolio by making it progressively greener.”

The new ‘Green Route’ offerings underline Axpo Italia's commitment to creating innovative solutions for managing energy. These tailor-made pathways enable businesses and consumers to accelerate their transition towards sustainability. This approach allows customers to choose their own green goals and how to achieve them, while contributing to the development of renewable energy sources.

Simone Rodolfi stated: “It's a complex and exciting challenge that we're able to embrace thanks to our international experience across many markets in Europe and the United States, and to the Group's financial strength.”

Great interest among industrial customers

With ‘Green Route’, Axpo Italia has further broadened the range of green options available to customers.

Many have already started on the road towards energy sustainability. They have signed agreements to receive renewable energy through bundled GoOs and benefit from innovative, cutting-edge infrastructure for supplying electricity. For instance, it’s now possible for them to combine energy from a wind farm with the energy produced by a certified biogas plant which runs on gas generated by fermenting agricultural products.

Simone Rodolfi concluded: “Our goal is to build ever more sustainable communities through the adoption of renewable energy sources, the electrification of transport, and the improvement of building energy efficiency in our country.”