Against the background of rising electricity prices in recent months (420 to 840 BGN per MWh in March), businesses are looking for alternative solutions. One such option is the long-term contract for the supply of green energy at a fixed price, which also enables the achievement of the criteria for energy independence and ESG (Environmental, Social and Governance) at the European level.
A1 Bulgaria, the local unit of A1 Telekom Austria Group, chose that option and signed a ten-year contract in March with Renalfa (a shareholder in the clean energy investment group is the publisher of Capital Weekly Ivo Prokopiev) for the supply of 20,000 mWh of green electricity per year. Under the Power Purchase Agreement (PPA) energy will be provided from a solar park with an installed capacity of 33 mWp located in southern Bulgaria. The 20,000-megawatt-hours for A1 represent nearly half of the plant's annual output capacity.
"Climate changes are the biggest challenge of the 21st century. While digital technology can help sustainable development, unprecedented growth in data traffic during the COVID-19 pandemic has forced the industry to increase electricity consumption to unprecedented levels," Alexander Dimitrov, Chairman of the Management Board and Chief Executive Officer of A1 Bulgaria told Capital Weekly.
"As part of the A1 Telekom Austria Group, we are aware of our responsibility toward the environment and have set ourselves an ambitious goal: to become a carbon-neutral company by 2030. This will be achieved by reducing our carbon footprint and gradually moving to renewable electricity sources,' Dimitrov added.
Along with the clean energy supply, Renalfa will provide the so-called sleeving service to the telecommunications company - the first sleeving agreement on the Bulgarian market.
The executive director of Renalfa Yuri Katanov commented:
"Corporate contracts for long-term electricity supply are the backbone of the energy transition and we are very happy to announce the first such contract transforming the production schedule of RES producers to the needs of the client.
What exactly are PPAs
Shortly, these are long-term contracts that ensure predictability of costs for years to come and significantly reduce the price risk of the energy exchange.
They guarantee energy supply at lower and, most importantly, stable prices than the energy exchange. The main logic of the PPA is to conclude an energy supply agreement with a term of 7, 10, 12 or 15 years and a fixed price for the entire period. There are various PPA models on the market to meet the diverse needs and preferences of businesses. They are also suitable for larger corporate and industrial users. In addition, such agreements provide an opportunity to demonstrate a strong commitment to environment protection and sustainable development to customers and investors, meet regulatory requirements, improve the ESG (Environmental, Social and Governance) rating of the company or generate additional financial and marketing advantages.
Against the background of the war in Ukraine and the risks to the supply of Russian gas and oil, the EU and Bulgaria in particular must encourage the further development of the RES sector, which will ensure greater independence and predictability.