June 12, 2019 / 12:17 PM / 6 days ago

German industry could boost green power use via derivatives - report

* Study looked at potential annual power purchasing deals

* Would help renewable developers attract financing

* Industrial consumers, for their part, would like green image

* Traders want in on long-term deals to expand activities

By Vera Eckert

FRANKFURT, June 12 (Reuters) - German companies could source green electricity worth around 2 billion euros ($2.3 billion) a year within a few years with the help of derivatives called power purchase agreements (PPAs), an independent study said.

PPAs are effectively insurance policies for renewable energy project developers against the risk of falling power prices.

So far there are few known German PPA projects but more power users are seeking such deals with designated green energy generators as German and other European industries face pressure from investors and authorities to shift to greener energy.

Power firms in turn are seeking to finance wind and solar parks with PPAs to show lenders they have secured sales at fixed prices for, say 10 to 15 years, ahead of the large-scale expiry of 20-year fixed subsidy projects from the middle of the 2020s.

“We have found there is a finance volume for 2 billion euros (of PPA derived power) a year...that is the PPA potential the industry could carry,” said Peter Baum, author of a study issued by Aurora Energy Research.

To arrive at its numbers, Aurora studied the current annual power consumption of 380 terawatt hours (TWh) by process industries, trade and commerce.

It identified companies whose banks would fund power purchases on the basis of their top financial ratings and arrived at a potential 51 TWh of power per annum, which are fed into manufacturers’ output of products like steel, cement or chemicals.

Certified green power would not only have a high marketing value for these heavy carbon emitters but also for companies depending on consumers’ trust, such as breweries or chocolate makers.

Germany is lagging behind green PPA markets in southern Europe, Scandinavia, and wider traction in the Unitd States.

Traders want to help arrange PPAs to widen their activities because the output of conventional plants is decreasing and wholesale markets only offer prices for up to the next four years.

Earlier this year, Mercedes arranged a deal with Norwegian renewable power producer Statkraft to source power from German wind farms, utility EnBW signed a PPA deal for a solar park to be commissioned in Brandenburg state..

$1 = 0.8829 euros Reporting by Vera Eckert, editing by Emelia Sithole-Matarise

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