Support of electricity generated by RES through Power Purchase Agreements

Energy customers in the Czech Republic can buy electricity from renewable energy sources (RES) using, so called Power Purchase Agreements (PPAs). The purchase of “clean” electricity directly from the producer through PPA represents a systemic change in the way of financing the production of electricity from RES and the transition from state-financed support to private support.

The contract for the purchase of electricity from RES is concluded between the customer and the producer of electricity from RES, irrespective of the type of source and the technology used, for up to 25 years. The subject of the contract is a long-term supply of “clean” electricity to the customer, who receives certificates from the producer proving the origin of electricity from RES (guarantees of origin).

PPAs bring benefits to both customers and also electricity producers; on the customer's side, it is primarily a long-term fixation of electricity costs, minimization of the risk of fluctuations in electricity prices and guarantee of electricity consumption from renewable sources. Producers of electricity from RES have long-term predictable income, which guarantees their return on investment and the possibility of bank financing.

The popularity of PPAs has been increasing worldwide, which is obvious from the growing volume of installed capacity of RES electricity provided through these contracts.