William Malcolm

Skoda Auto Commits Over 1 Billion Crowns To Renewable Energy Projects

The private sector is beginning to pave the way for public construction in the construction and operation of renewable electricity sources. This is made possible by PPA (Power Purchase Agreements) contracts, in which the customer undertakes for how much and for how long he will buy electricity from the “green source” operator. On the domestic market, a large company, specifically the Škoda Auto carmaker, did this for the first time. The contract will be over a billion crowns.  

For the largest domestic private employer, electricity will be consumed for 20 years by its subsidiary Ško-Energo, which supplies energy for all Škoda plants.

The electricity supplier will be the Ambient Energy energy group, which will use four new wind power plants in the Opava region, with a total output of nine megawatts. The entire park, which is to supply electricity next year, should be built by the energy developer, Micronix, for 400 to 500 million crowns.

In this contract, Škoda will receive a 20-year fixed price for electricity, the price of which otherwise fluctuates on the stock exchange. At the same time, it is subscribing to an environmentally friendly policy, which will improve its position on the financial market, where banks and insurance companies are beginning to pursue this policy. Thanks to this, green-minded companies can ultimately have cheaper lending or insurance.

“We believe that we will live up to our commitment to become carbon neutral in the production of electricity and heat according to our plans. We target renewable energy sources and strive for their diversification, “says Tomáš Kubín, CEO of Ško-Energo, about the new contract.

Ambient Energy, which specializes in the purchase and supply of electricity from renewable sources, believes that similar projects will increase. She has already negotiated other PPA contracts; in the future she would like to conclude dozens of them in the Czech Republic.

“PPA stores are one of the ways to decentralize energy and develop renewables. They work great in the United States, for example, and could be successful in the Czech Republic as well, ”says Ambient Energy chief Ladislav Seidler.

The first similar contract was concluded in the Czech Republic last year. Martin Pacovský, former head of ČEZ’s Renewable Resources Division, has contracted a 20-year “green electricity” contract for his Jarošovský brewery from the energy company Atlantis Management. However, the size of the contract is significantly smaller compared to the Škoda one. 

“Economically, the PPA comes out completely without subsidies. I think it has great potential, “Pacovský told the weekly Hrot last November.  

The fact that similar contracts can be advantageous for both parties is also confirmed by the head of the Association of Modern Energy, Martin Sedlák. “Contracts between businesses and green energy producers are usually concluded for 10 to 20 years. They are advantageous for factories because they acquire predictable conditions for the prices of energy consumed over a long period of time. In return, green energy producers benefit from a long-term commitment to take green electricity, ”represents the benefits of this Sedlák system. Predictability of prices and consumption is also crucial for banks, which largely help finance renewables. 

The corporate market for long-term green energy contracts has grown in Europe over the last seven years to 11,000 megawatts of installed capacity. In 2020 alone, contracts were concluded for about three thousand megawatts of new PPA projects.

Among well-known companies, these contracts are used, for example, by Heineken, Danone, Bosch, Volkswagen or Deutche Bahn. They are most widespread in Spain, where its popularity is ensured by the highest intensity of sunlight in Europe. However, new type contracts are already being developed in France, Germany or Sweden. 

Globally, the volume of privately concluded long-term agreements increased by 18 percent year-on-year to 23.7 gigawatts last year, despite the coronavirus pandemic. According to Bloomberg, the United States dominated among the countries, and Amazon dominated among the companies.