RE-Talk ASEAN: Corporate Sourcing Reaching the Edge of Boom
Market of Corporate PPA is growing rapidly especially over the past few years and mainly done in AMER, APAC is still has a small portion. Growing attention to ESG, de-carbonization and increasing cost-competitiveness of renewable is driving the demand
Top Motivations for RE100 Companies in Renewables Sourcing
-
Management of GHG emission
-
Corporate Social Responsibilities/ESG
-
Stable Power Price
-
Economics of Renewable Energy
Major Commitments and Targets Pushing Corporates Forward
-
UN Fashion Industry Charter for Climate Action (30% GHG emission reduction by 2030)
-
RE100
-
Fashion Pact (Zero CO2 emission by 2050)
-
Science-based Target
-
Carbon Disclosure Project (CDP)
Industries Consuming Renewable-powered Electricity
-
#1 Financial Sector
-
#2 Materials
-
#3 IT Industry / Real Estate
Most Popular Green Energy Sourcing Approaches taken by Corporate Buyers
-
#43% from Unbundled Energy Attribute Certificate Purchase
-
#31% from Contract with Suppliers (Green electricity tariff/products)
-
#22% from Direct procurement from offsite generators or onsite installation owned by a supplier (Corporate PPA)
Top Demands from A Buyer’s Perspective When It Comes to Renewables Sourcing
-
Low complexity
-
Low risk (require solid legislative framework, wholesale market fluctuations, etc.)
-
Transparency & Visibility
-
Credibility (reliable developer partners and diverse products)
-
Flexibility & Scalability
Typical Types of Corporate PPA
-
Onsite PPA
-
Offsite Private-wire PPA
-
Offsite Sleeved PPA
-
Offsite Financial/Synthetic/Virtual PPA
Key Issues & Risks of Corporate PPA
-
Term (varies country by country)
-
Price (fix, variable, currency, competitiveness, etc)
-
Volume (pay as generated, pay as forcasted, pay as contracted, pay as consumed)
-
Off-taker Credit
-
Hidden Cost (balancing cost, transmission losses, etc.)
-
Local regulatory and financing environment are yet well improved
A Glance at Selected Q&A
*（Highlight Questions with SB Energy）
Q: Corporate PPA Market in Japan in terms of legal framework, grid code, & pricing?
A: Japan remains to be a quite difficult market. The good part is that more and more RE100 companies are gearing interests in procuring green energy. However, the legal framework is not yet ready by giving generators the permits to directly sell the power to consumers. Another challenge would ne he competition in B2B market, as consumers with good credits tend to work with utilities directly, hence the price has to be very competitive. Having said that, SB Energy is working on innovative approaches to work around the current obstacles and is confident provide more value to the industrial clients.
HOST
PRESENTER
Isao Kajimura
Deputy Head, Power Business Division
SB Energy, Japan
Massimiliano Francone
Head of Global Commercial Origination
Enel Green Power, Italy
Rasmus Nedergaard
Managing Director
act Renewables, Germany
Hugh Hamill
Strategic Advisor
Hwaseung Group, South Korea
WHITE PAPER
In terms of CPPA opportunities in APAC, Australia has the most mature market among others. Additionally, the enormous potential is in Japan, where CPPAs will grow significantly in the coming years due to the phasing out of FIT scheme and increasing RE100 committments. In Southeast Asian countries, Vietnam is the only country that has a specific target of corporate PPAs, followed by the Philippines, who also announced a green energy option program (GEOP) for trading and supplying RE electricity.
*（Highlight Questions with Enel Green Power）
Q: The transition from FIT to tender to corporate sourcing is happening in most countries in Asia. Do you believe that this transition from FIT to a liberalized market will follow European trends and timelines?
A: To date, Enel Green Power signed more than 7.2GW of PPA with 3.5GW be in the C&I sector. The transition from FIT to tender already happened everywhere around the world and has helped the renewable industry more competitive and attractive than ever. However, the pass from tender to corporate sourcing is more complicated, very much related to the competitiveness of the PPA itself and located market. To take European market as an example, the boom in Spain. In Asia Pacific, EGP is focusing on 4 markets, inclusive of Australia, India, Vietnam especially in the recently announced DPPA program, and South Korea. Solutions provided by EGP does not only tackle emissions, but also improve costs, resilience, and price risk management.
*（Highlight Questions with act Renewables and Hwaseung Group）
Q: What is the current Status of Corporate PPA Market globally and in Vietnam in Specific?
A: The corporate market currently is still limited to a few companies, for example in Europe there were around 20-30 PPAs were signed last year, with half of them signed by Google along. Hwaseung group, as a corporate buyer, is a about USD$ 4.5 Billon dollar company, employing over 54,000 people worldwide, and is the 2nd largest footwear supplier for adidas Group in terms of volume and revenue with plants in Vietnam, China, Indonesia, and future in India. Along with great efforts act Renewables, we are actively engaged in the Vietnam’s DPPA program.
From our understanding, the aim of the DPPA program by the Vietnamese government is firstly to attract more investments from foreign brands and secondly to scale up the country’s energy capacity with support from commercial activities. Last year, a new wholesale market was also established in Vietnam to accommodate the DPPA initiative. However, the challenge and ultimate question remain to be the price, and when and how the price would be changed over the contract terms, for example in Hwaseung’s case if they sign a 20-year PPA contract.