by Mariyana Yaneva, Renewables Now Managing Editor
Viewed in a climate change context, energy consumption frequently represents businesses’ single largest contribution to greenhouse gas emissions. Hence, turning to renewable energy is the obvious solution for all companies that want to decarbonize their electricity use faster than the national grid would allow. This is especially true in Southeast Europe (SEE), where the utility power sector is still heavily dominated by fossil-fuel power plants.
Over the last decade, technological advances and increased implementation have helped bring down prices of renewable energy technologies, wind and photovoltaic (PV) power, in particular. Wind turbine prices have fallen by almost a third since 2009 while solar panels costs have plummeted as much as 80%, allowing business to make their sustainability goals cost-effective as well.
Many of the world’s most influential companies have committed to using 100% renewable energy sourced (RES) electricity by 2020 under the RE100 initiative created in 2015. By mid-July this year, the initiative has already passed 100 members, three years ahead of schedule, and has created a demand for 146 TWh of renewable power per year. This combined demand is roughly equal to the annual electricity consumption of Poland.
Companies in SEE, especially the larger commercial and industrial (C&I) consumers, are generally less concerned with their carbon footprint and corporate renewable energy buyers are scarce at present. Yet, the region is following the worldwide trend with steadily growing interest in RES electricity strategies. These can vary from investing directly in a generation asset, or purchasing the power from a third party’s project to buying renewable certificates.
Investing directly in a renewable energy installation on site, mostly PV, is common for small businesses. Corporate power purchase agreements (PPA) – longterm contract, under which a business agrees to purchase electricity directly from a renewable power producer, are very uncommon in the region. Even in EU-member states Bulgaria, Romania, Croatia and Slovenia, the electricity market regulations are not sufficiently liberalised to facilitate such contracts. National power markets in SEE are largely dominated by state-owned utility companies and renewable power projects are financed through state support schemes like the feed-in tariff in Bulgaria and the green certificates system in Romania, Plamen Popov, Head of Trading South East Europe at Statkraft Markets GmbH, tells Renewables Now.
Managed by a non-profit Association of Issuing bodies (AIB), EECS is the basis for certificate schemes in 20 European countries and enables international trade.
Slovenia-based GEN-I group, a member of AIB with operations in more than 20 European countries, says that the number of clients who opt for 100% RES supply grows each year but in SEE the private sector’s main criteria when buying electricity is still price, not origin of electricity. Only certain segments, like companies from tourism sector or smaller consumers, which have relatively low energy bill, are more likely to purchase green electricity, Tjana Kozlin of GEN-I group tells Renewables Now.
“In SEE, demand for certified renewable power is primarily driven by sustainable development and corporate responsibility strategies of multinational corporations with local footholds,” Simeon Valchev of Nvalue Energia commented for Renewables Now.
Europe-wide, the GO markets have grown consistently over the last decade. Demand for GO-documented renewable electricity in Europe, marked a 39% year-on-year growth in the second quarter of 2017, AIB figures show. By the end of June 2017, 377 TWh of GO-documented renewable power was purchased, already exceeding the total volume for all of last year with 11 TWh. “Given that this development continues at the same pace, total demand for 2017 will likely reach nearly 500 TWh,” says Tom Lindberg, managing Director in ECOHZ, a Norway-based company which sold and delivered more than 55 TWh of documented renewable electricity in 2016.
The Association of traders with electricity in Bulgaria (ATEB) tells Renewables Now that local companies have started to show interest in buying renewable energy over the past few years. Some of its members do handle such contracts but these deals account for a very small fraction of the market. Demand is driven almost exclusively by international companies and their environmental policies and there are a few roadblocks on the way that may trip less motivated buyers.
The industry body notes that current design of the electricity market in the country does not really encourage trade in green electricity. All major renewable energy producers, especially wind and PV power producers, have long-term power purchase contracts to sell their output at feed-in tariffs. When the limit for electricity output which is guaranteed an off-take under the feed-in tariff is reached, then the producers can start offering their energy on the free market. PV plants, for example, reach their limit around August or September, thus leaving a limited amount of electricity that can be sold, along with its guarantees of origin, to traders.
Green electricity trading faces another red-tape hurdle when it comes to transferring the guarantees of origin between traders. In a free market environment, electricity can be sold from one trader to another several times before reaching the end customer. To certify that the electricity comes from renewable energy sources, each time the power is sold, the trader must apply for transfer of the associated guarantees of origin with the Sustainable Energy Development Agency (SEDA). It is currently a lengthy process that could be costly as well. If this transfer process is streamlined and “intra-day” power trading is introduced on the power exchange, renewable energy producer would be able to cut on balancing costs and offer a more competitive price to spur green electricity trading, ATEB notes.