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PPA Market Complexity: What’s Happening in PJM, Poland and Australia?

Towards the end of 2019, significant regulatory initiatives began to sweep over the renewable energy landscape, resulting in changes that may impact corporate and industrial PPA buyers.  This blog will address three complex market conditions that are occurring around the world and includes advice on how companies can address them. While these distinct situations warrant attention and possibly action, the challenges are not insurmountable.

Europe | Poland: Renewable Energy Auctions

If your company is looking to sign a power purchase agreement (PPA) in Poland – the time to act is now.

The country has experienced volatility and rising electricity prices in past years, driven largely by carbon pricing and a heavy reliance on coal. As a result, there is high interest from companies with electricity load in Poland to sign PPAs and effectively mitigate price volatility, while also reducing emissions. These economic and environmental objectives have spurred corporate activity in renewables, and global industry leaders, such as Signify, have entered into long-term PPAs.

But it’s not just companies that are interested in renewables. The Polish government also auctions out contracts to developers to build renewable projects. In December of 2019, the government awarded contracts covering around 2.2 gigawatts (GWs) of renewable capacity, which has drastically reduced the pool of available projects for companies to choose from. The next auction is set for the end of 2020 or earlier and up to another full gigawatt of renewable PPAs is expected to be awarded.

If your company is exploring PPAs in Poland, the next few months are crucial. As more and more companies with ambitious energy targets recognize the urgency of the situation and rush to market, supply of renewables will become even more constrained.


Contributed by James Lewis, Director of International Cleantech


Australia | Victoria and NSW: The AEMO Ruling

Towards the end of 2019, the Australian Energy Market Operator (AEMO) ruled that five major solar farms across Northwestern Victoria and Southwest NSW had to drastically reduce their energy output. The ruling stems from the grid’s inability to integrate increased output from renewable capacity. While the future may bring more long-term solutions, the only way to immediately resolve the urgent instability is to limit energy output onto the grid.

AEMO has confirmed that the ruling is likely to impact projects in the area that are largely completed, awaiting commissioning, or in construction phase. Early to mid-stage projects are being placed in a queue for an indeterminate amount of time. Developers fear that the resulting delays could last months, or even up to a year.

For companies that have entered into PPAs with any of the affected projects, the regulation will likely have a large impact on the forecasted value of their contracts. While a lot can still happen in the upcoming year, it is important for companies to have advanced understanding of contract terms, market dynamics and regulatory changes.


Contributed by Kirk Lawrence, Client Development Director, Australia


United States| PJM: The FERC Ruling

In December of 2019, the U.S. Federal Energy Regulatory Commission (FERC) ruled that the PJM interconnection—a regional grid transmission organization (RTO) serving the U.S. Midwest and Mid-Atlantic—must expand its capacity market’s Minimum Offer Price Rule (MOPR) to all new generators who receive state subsidies. Energy attribute certificates (EACs) and tax abatements are generally considered state subsidies and are important value streams required for financing renewable assets. This ruling effectively decreases the revenues that new renewable projects can receive, which will likely lead to increases in PPA rates. Therefore, these changes can have a significant impact on companies looking to sign PPAs in PJM.

However, there are many moving parts to consider for companies who are actively engaged in the PJM market for PPAs. A large number of organizations are currently lobbying for a re-hearing from FERC, which means that the outcome of the ruling might look very different in a few months. Additionally, operational assets or assets that are in/near construction are likely to be grandfathered into the old regulation and therefore be largely unaffected by the ruling.

The current situation in the PJM market is very complex, and the industry is working to fully understand the impact of the changes. Companies need to be sure they equip themselves with crucial market intelligence and stay up to date with the ever-changing developer landscape and regulatory environment - because even the smallest change could have a significant impact.

One easy way to keep abreast of what’s happening in global renewable energy markets is through Schneider Electric’s NEO Network. Free to all qualified companies through our Accelerator Access program, the NEO Network provides timely updates on more than 50 global markets around the world.


Contributed by Josh Heeman, Senior Cleantech Specialist


Regardless of which markets your company is active in, Schneider Electric Energy & Sustainability Services (ESS) is here to guide you through any complexities you may face. With experts on the ground in all key markets, we work with sophisticated data and a wide network of developers to translate market intelligence into action. Our in-depth local expertise combined with our global experience enables our team to help clients execute favorable deals – even in the face of regulatory headwinds and market complexity.

Contact us today.