AleaSoft Energy Forecasting, February 15, 2022. The current situation of high prices in the energy markets is having a particularly serious effect on electro‑intensive consumers. For secure coverage they need PPA at competitive prices. Fernando Soto, Director‑General of AEGE, explained in a webinar organised by AleaSoft Energy Forecasting the auction that are organising to close PPA between renewable energy projects and electro‑intensive consumers.
Last Thursday, February 10, the second webinar of 2022 of the series of monthly webinars organised by AleaSoft Energy Forecasting took place. The webinar was entitled “The macrovolatility of energy markets in Europe. Benefits of PPA for large and electro‑intensive consumers” and, in the analysis table after the Spanish version of the webinar, there was the participation of Fernando Soto, Director‑General of AEGE (Association of Companies with Large Energy Consumption), and Juan Puyol, Deputy Director at CESCE (Spanish Export Credit Insurance Company). Customers and those interested in the forecasts of AleaSoft Energy Forecasting can request the recording of the webinar at this link.
The situation of electro‑intensive consumers in the energy markets prices crisis
At the table, it was analysed how the current crisis of prices in the energy markets is affecting companies whose energy costs represent a very important fraction of their total costs. According to Fernando Soto, the electro‑intensive industrial sector in Spain is highly exposed to energy markets prices. In 2022, 90% of the energy consumed by the energy‑intensive industry is being purchased on the daily market.
The rise in prices in the electricity market is mainly caused by the increase in gas and CO2 emission rights prices. Although this price increase is affecting all European countries in a very similar way, Fernando Soto pointed out that electro‑intensive companies in Spain are being more affected compared to their counterparts of the rest of countries. The main cause is the additional charges and tolls that are included in the final price of the electricity bill, which in other countries are lower or electro‑intensive consumers have exemptions. In addition, in other countries such as France or Germany, consumers have more options for bilateral contracts at much more competitive prices than market prices.
Renewable energy auctions for electro‑intensive consumers
Due to the worrying situation of the Spanish electro‑intensive industry, the AEGE has been working for some months to be able to acquire energy at competitive prices. As explained by Fernando Soto, they are preparing an initiative to organise a private auction for renewable energy projects in order to meet the demand for PPA by their associated companies and groups of electro‑intensive consumers.
The auctions will have very similar characteristics to the renewable energy auctions organised by MITECO (Ministry for the Ecological Transition and the Demographic Challenge). Wind and photovoltaic energy capacity will be auctioned and the energy will be delivered pay‑as‑produced for a period of twelve years. OMIE will be in charge of organising the auction and of the subsequent settlement of the energy. The intention of the AEGE is carrying out the auction in the months of June or July of this year so that the winning projects begin to deliver energy between 2023 and 2024.
The offtakers of the PPA resulting from the auction must be consumers accredited as electro‑intensive according to the requirements of the Statute of the electro‑intensive consumers.
Recent evolution of the PPA market
The PPA outlook changed a lot in recent months as a result of the escalation of prices in the energy markets. The PPA market was very active in 2020 and the first half of 2021. But with the rise in prices, the negotiating activity was greatly reduced, uncertainty grew and offers lasted few days on the table as markets prices rose without an apparent ceiling.
The prices at which the PPA were offered, which were around €30/MWh after the first renewable energy auction of MITECO in January 2021, were above €50/MWh in the worst moments.
According to Fernando Soto, the offers that the retailers provide them with right now are based on the electricity futures markets prices, so they are very unattractive for electro‑intensive consumers.
AleaSoft Energy Forecasting’s analysis on the prospects for energy markets in Europe and the renewable energy projects financing
The next webinar of this series of monthly webinars will take place on March 17, 2022 and will feature the participation of speakers from EY to analyse the main novelties and perspectives in the regulation of the electricity sector, the renewable energy projects financing, PPA, self‑consumption and portfolio valuation, in addition to the usual review of the evolution of energy markets in Europe.