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Δημόσια Διαβούλευση για τη θέσπιση πλατφόρμας σύναψης συμβολαίων παραγωγής ενέργειας από ΑΠΕ (RES PPAs Platform)

Η ΡΑΕ στο πλαίσιο της ενίσχυσης της λειτουργίας των αγορών Ηλεκτρικής Ενέργειας, καθώς και της προσήλωσης της Αρχής στην επίτευξη των βιώσιμων στόχων που τίθενται σε διεθνές και εθνικό επίπεδο, διερεύνησε, με τη συνδρομή εξειδικευμένου συμβούλου, τις εναλλακτικές για τη δημιουργία πλατφόρμας η οποία θα ενισχύσει την δραστηριότητα της σύναψης συμβολαίων αγοροπωλησίας ενέργειας, παραγόμενη από ΑΠΕ (RES PPAs) στην ελληνική αγορά ηλεκτρικής ενέργειας. Παράλληλα, το Ελληνικό Χρηματιστήριο Ενέργειας, διερευνά τις επιλογές που διαφαίνονται για την δημιουργία μιας πλατφόρμας σύναψης συμβολαίων παραγωγής ενέργειας από ΑΠΕ, το μέγεθος της ελληνικής αγοράς, καθώς και τις λύσεις που έχουν εφαρμοστεί σε περιπτώσεις άλλων χωρών προς την κατεύθυνση της ενίσχυσης της σύναψης συμβολαίων παραγωγής ενέργειας από ΑΠΕ. Σημειώνεται πως το ΕΧΕ βρίσκεται στο τελικό στάδιο ολοκλήρωσης της εν λόγω μελέτης, ήτοι την αποτύπωση επιλογών για τον τρόπο λειτουργίας της εν λόγω πλατφόρμας και στην παρούσα Δημόσια Διαβούλευση λαμβάνονται υπόψη τα πρώτα δύο στάδια ήτοι, η ανάλυση για το μέγεθος της ελληνικής αγοράς και η ανάλυση για τις περιπτώσεις λύσεων άλλων χωρών. Κύριες στοχεύσεις στο πλαίσιο της θέσπισης μιας πλατφόρμας σύναψης συμβολαίων παραγωγής ενέργειας από ΑΠΕ (RES PPAs Platform), αποτελούν: η ενίσχυση της ανάπτυξης νέων έργων ΑΠΕ με όρους αγοράς, καθώς η βιωσιμότητά τους άρα και η χρηματοδότησή τους θα διασφαλίζεται -ως επί το πλείστων- απαλλαγμένη από σχήματα κρατικής ενίσχυσης η ενίσχυση των επιλογών που έχουν οι μικρότεροι σε μέγεθος συμμετέχοντες τόσο από την πλευρά του πωλητή (seller) όσο και από την πλευρά του αγοραστή (off-taker) Λαμβάνοντας υπόψη τα ανωτέρω, η ΡΑΕ θέτει σε δημόσια διαβούλευση τα ευρήματα των μελετών οι οποίες έχουν καταρτιστεί προς την κατεύθυνση θέσπισης μιας πλατφόρμας σύναψης συμβολαίων παραγωγής ενέργειας από ΑΠΕ, με σκοπό την ενημέρωση του επενδυτικού κοινού και των συμμετεχόντων, καθώς επίσης για την λήψη σχολίων επί των ευρημάτων των μελετών και την κατάθεση σχετικών προτάσεων. Η δημόσια διαβούλευση θα διαρκέσει έως την Παρασκευή 16 Δεκεμβρίου

  1. Οι ενδιαφερόμενοι καλούνται να υποβάλουν τις απόψεις τους στη ΡΑΕ με ηλεκτρονική επιστολή στη διεύθυνση info@rae.gr. Μετά τη λήξη της παρούσας δημόσιας διαβούλευσης, η ΡΑΕ θα δημοσιοποιήσει κατάλογο των συμμετεχόντων, καθώς και το περιεχόμενο των επιστολών και παρεμβάσεών τους, με εξαίρεση την περίπτωση κατά την οποία ο αποστολέας αιτείται τη μη δημοσιοποίηση των στοιχείων του και/ή των απόψεών του. Επισυνάπτονται οι δύο σχετικές μελέτες: High level analysis of possible options for a centrally organised RES PPA platform RES CPPAs platform High-level analysis of possible options for a centrally organised RES PPA platform An AFRY report to the Regulatory Authority for Energy SEPTEMBER 2022 Disclaimer and Rights This report has been prepared by AFRY Management Consulting (“AFRY”) solely for use by the Regulatory Authority for Energy (RAE) (the “Recipient”). All other use is strictly prohibited and no other person or entity is permitted to use this report, unless otherwise agreed in writing by AFRY. By accepting delivery of this report, the Recipient acknowledges and agrees to the terms of this disclaimer. NOTHING IN THIS REPORT IS OR SHALL BE RELIED UPON AS A PROMISE OR REPRESENTATION OF FUTURE EVENTS OR RESULTS. AFRY HAS PREPARED THIS REPORT BASED ON INFORMATION AVAILABLE TO IT AT THE TIME OF ITS PREPARATION AND HAS NO DUTY TO UPDATE THIS REPORT. AFRY makes no representation or warranty, expressed or implied, as to the accuracy or completeness of the information provided in this report or any other representation or warranty whatsoever concerning this report. This report is partly based on information that is not within AFRY’s control. Statements in this report involving estimates are subject to change and actual amounts may differ materially from those described in this report depending on a variety of factors. AFRY hereby expressly disclaims any and all liability based, in whole or in part, on any inaccurate or incomplete information given to AFRY or arising out of the negligence, errors or omissions of AFRY or any of its officers, directors, employees or agents. Recipients' use of this report and any of the estimates contained herein shall be at Recipients' sole risk. AFRY expressly disclaims any and all liability arising out of or relating to the use of this report except to the extent that a court of competent jurisdiction sh all have determined by final judgment (not subject to further appeal) that any such liability is the result of the willful misconduct or gross negligence of AFRY. AFRY also hereby disclaims any and all liability for special, economic, incidental, punitive, indirect, or consequential damages. Under no circumstances shall AFRY have any liability relating to the use of this report in excess of the fees actually received by AFRY for the preparation of this report. All information contained in this report is confidential and intended for the exclusive use of the Recipient. The Recipient may transmit the information contained in this report to its directors, officers, employees or professional advisors provided that such individuals are informed by the Recipient of the confidential nature of this report. All other use is strictly prohibited. All rights (including copyrights) are reserved to AFRY. No part of this report may be reproduced in any form or by any means without prior permission in writing from AFRY. Any such permitted use or reproduction is expressly conditioned on the continued applicability of each of the terms and limitations contained in this disclaimer. 2 Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT STUDY OBJECTIVES High-level analysis of possible options for a centrally organised RES PPA platform Generation capacity from Renewable Energy Sources (RES) in Greece must more than double by 2030 to achieve the country’s climate goals. Finding a route in addition to the government supported Feed-in Premium (FiP) contracts is critical for the scale of rollout. However, despite the ambitious targets and an extensive pipeline of RES projects under development, the Power Purchase Agreement (PPA) market in Greece is still emerging, and its development will need to be accelerated to ensure the RES targets are achieved on time. In light of these challenges, the Regulatory Authority for Energy (RAE) wishes to explore different options around a centrally-organised PPA platform. Participation will remain voluntary, and the aim will be to support the PPA market in Greece, create a more mature environment and overall increase market-participants’ knowledge and experience, while enabling higher RES deployment in parallel with the established FiP support scheme. AFRY Management Consulting was appointed by RAE to define and assess options for a centrally-organised PPA platform. This study describes, at a high-level, possible solutions and their key features and discusses the main strengths and weaknesses of each option. This study is not, however, intended to provide an in-depth analysis of each option. It also should not be seen as a wider recommendation that centrally-organised structures are a prerequisite to promote the RES PPA market. We have seen RES PPAs emerging organically in a lot of markets. Under different circumstances, however, central structures can help facilitate RES PPAs, at least at the initial stages. 3 Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT REPORT STRUCTURE High-level analysis of possible options for a centrally organised PPA platform to further promote RES in Greece 1 Executive summary Including the summary of our study 2 Introduction Including a description of the challenges facing the Greek market, the key principles that underpin the options and the key objectives of such platform 3 Option analysis Including a discussion of the key features of each option 4 Option assessment Including an assessment of the strengths and weaknesses and how the options meet the key objectives Annex 4 Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT Annex Including supporting, background information Agenda
  2. Executive Summary
  3. Introduction
  4. Option analysis
  5. Option assessment 5 Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT Executive Summary INTRODUCTION │ KEY PRINCIPLES │ OPTIONS │ SUMMARY & RECOMMENDATIONS An extensive pipeline of RES projects under development, increased 2030 targets and current limits to the availability of FiP support create an opportunity for diversified routes-to-market and risk mitigation mechanisms CHALLENGES FACING THE GREEK MARKET Capacity from RES in Greece must more than double by 2030 to achieve the country’s climate goals. This can create opportunities for diversified routes-to-market and risk mitigation mechanisms, in addition to government supported contracts. The development of the PPA market in Greece needs to be accelerated to ensure the RES targets are achieved on time. 9.8GW of RES delivered via support schemes so far 21.1GW envisaged by 2030 11.3GW the required new build with 74.0GW under development 3.8GW to be delivered via upcoming FIP auctions with the remaining 7.5GW needing to find alternative routes-to-market

(1)PPA PLATFORM The Regulatory Authority for Energy wishes to explore different options around a centrally-organised PPA platform. Participation will remain voluntary, and the aim will be to support the PPA market in Greece, create a more mature environment and overall increase market-participants’ knowledge and experience, while enabling higher RES deployment in parallel with the established FiP support scheme. 1. Depending on the offshore wind target capacity, this ‘gap’ could be between 5.5 -7.5GW 6 Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT Executive Summary INTRODUCTION │ KEY PRINCIPLES │ OPTIONS │ SUMMARY & RECOMMENDATIONS A mechanism that encourages participation in order to meet its overarching goal of enabling and accelerating deployment of RES investments KEY PRINCIPLES OF A PPA PLATFORM Accelerate RES deployment Equal access to all market participants Encourage bilateral negotiations Allow the PPA market to mature Voluntary Not intervene with other initiatives or delay current negotiations OPTIONS ANALYSED Three options are analysed as part of this study: Simple 7 Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT 1 2 3 Complex Executive Summary INTRODUCTION │ KEY PRINCIPLES │ OPTIONS │ SUMMARY & RECOMMENDATIONS Three options are explored covering a range of possible solutions – from a simpler but easy-to-implement set-up to a more complex mechanism A FACILITATING PLATFORM
(1)1 Match Buyers Anonymous Sellers Submit nonbinding offers and terms of energy sold or bought Buyer Expression of interest Bilateral negotiations outside of the platform Seller A FACILITATING PLATFORM WITH ENHANCED CHARACTERISTICS
(2)2 Match 1 Buyers Anonymous Sellers Submit binding offers and terms of energy sold or bought based on pre-defined ‘products’ Selection of buy/sell offers by platform participants Buyer A for Seller C offer Seller B for Buyer D offer Platform operator executes separate Guarantees >> << Guarantees contracts with buyers/sellers Seller C Buyer D Match 2 A PLATFORM WITH BINDING OFFERS AND AUTOMATED & AGGREGATED MATCHING 3 Buyers Anonymous Guarantees >> Sellers Submit binding offers and terms of energy sold or bought based on pre-defined ‘products’ Platform optimises selections of bid/offers in an aggregated manner Platform operator executes separate contracts with buyers/sellers
  1. A similar solution was introduced in Italy in March 2022 – please refer to the Annex for a description. │
  2. Illustration presents the enhanced elements of this option only. 8 Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT Aggregated match Seller Buyer Executive Summary INTRODUCTION │ KEY PRINCIPLES │ OPTIONS │ SUMMARY & RECOMMENDATIONS Consider Option 1 as a first step, and wait for market signals to assess whether the enhanced elements of Option 2 need to be developed OPTION 1 9 ENABLE THE PPA MARKET TO MATURE FACILITATING 2 FACILITATING WITH ENHANCED CHARACTERISTICS 3 BINDING OFFERS WITH AUTOMATED & AGGREGATED MATCHING Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT ✓ Encouraging and promoting bilateral negotiations ✓ Can delay marketplayer know-how x Alternative route for market players – not aimed to increase marketplayer know-how INCREASE COMPETITION MARKET INTERFERENCE ✓ Reliant on participation – not all types of players would necessarily benefit equally ✓ Enhanced features can benefit equally smaller players or players with limited experience ✓ The additional feature could delay current initiatives; upfront clarity on mechanics and design is needed ✓ Enhanced features can benefit equally smaller players or players with limited experience x Potentially higher chance of delaying or affecting other initiatives SIMPLICITY ✓ Does not interfere with other market mechanisms or initiatives ✓ Simpler mechanism that can be developed in a shorter timeframe ✓ Complexity could create delays x Increased complexity could create even more delays Agenda
  3. Executive Summary
  4. Introduction
  5. Option analysis
  6. Option assessment 10 Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT BACKGROUND An extensive pipeline of RES projects under development, increased 2030 targets and limits to the availability of FiP support create opportunity for diversified routes-to-market and risk mitigation mechanisms RES STATUS (GW)
(1)Delivered via support shemes 2030 target 4.5 7.7 4.3 9.8 7.0 Pipeline & required new capacity Wind 6.4 - With the announced RES FiP auction volumes for the next four-year period covering about 30% of the required new capacity envisaged by the 2030 RES targets and an extensive pipeline of RES projects under development, there is opportunity for diversified routes-to-market and risk mitigation mechanisms, in addition to government-backed contracts. 21.1 11.3 Expected FiP auctions Solar - Historically government support mechanisms have facilitated the delivery of solar and onshore wind capacity. - Some other European countries have seen an increase in the use of RES Power Purchase Agreements (PPAs) - and in a number of these markets PPAs are considered the ‘go-to’ choice for generators, offtakers and financiers alike. 74.0 3.8 Gap: 7.5GW Depending on the offshore wind target capacity, this ‘gap’ could be between 5.5-7.5GW Required new capacity Revised NECP Remaining pipeline - Although PPAs are a ‘hot topic’ in Greece and they have already started to appear, differences when compared with government-backed contracts have so far meant there is limited uptake. This could also be a result of a lack of knowledge and experience, by market participants, on the workings of PPAs. - There is therefore a need to improve ‘knowledge and experience’ to ensure the ambitious targets are delivered. RAE is now seeking to understand how a centrally organised platform could facilitate the PPA market and allow it to quickly develop for the aspired RES targets to be achieved on time. Non-operational FiP Source: “Delivered”: DAPEEP, May-22 “RES Account” report, “Revised NECP targets”: based on announcements. “Remaining pipeline” minus (“Required new capacity” and “Delivered” volumes). Analysis performed in spring 2022. 11 Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT (RAE – production certificate list March-2022 for wind & solar) BACKGROUND With a pipeline of 74GW and a RES target that requires an additional 11GW to be deployed by 2030, there is enough ‘space’ in the market for the FiP scheme and PPAs to co-exist without impacting on the upcoming auctions GOVERNMENT SUPPORTED FIP CONTRACTS Competitive State aid procedures, such as the FiP contracts in Greece, are a well-established means of RES deployment, providing for long-term revenue stabilisation mechanisms. However, there are features that can make them ‘less attractive’ to certain market participants: (a) the timings of the FiP auctions; (b) the level of competition either driven by the different participating technologies and/ or the total volume supported; (c) reductions regarding auction ceiling prices; (d) reductions to the duration of the State Aid scheme – e.g. in the latest Spanish auctions the contract duration for onshore wind and solar PV was 12 years with a min and a max amount of energy to be delivered within this period
(1); and (e) other features that can increase exposure to market prices – e.g. the Market Adjustment Parameter applicable in Spain. We would, therefore, expect that market participants are looking into more than one routes-to-market, and, similarly to other European markets, there would be an appetite from players to diversify their portfolios and own both regulated and unregulated assets. RES POWER PURCHASE AGREEMENTS PPAs can offer an alternative route-to-market and provide hedging against market risk. PPAs can offer flexible contract terms and unlock direct access to cheap green electricity – an appealing case especially due to unprecedented high energy costs currently and ESG
(2)objectives set by larger corporates and energy consumers. At the same time, however, market participants would need to adapt to the new terms and options offered by these market-driven contracts. As such, it is inevitable that the PPA market would need to grow in parallel to the government-backed tenders. 1. Generators can opt out (voluntarily) after producing the minimum amount of energy; they need to exit the scheme after producing the maxi mum amount of energy, if e.g. this maximum occurs before the end of year 12. │ 2. Environmental, Social, and Governance 12 Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT BACKGROUND A well-designed PPA platform would enable the PPA market to develop, promote bankable options, and increase market-participants’ knowledge and experience KEY PRINCIPLES OF A PPA PLATFORM RAE wishes to explore how a centrally-organised PPA platform could be implemented in Greece so that the PPA market can further develop and become more mature. In principle, such mechanism: (
  1. a)remains voluntary for participants; (
  2. b)is designed in a way that encourages bilateral negotiations between parties; (
  3. c)does not delay current or future negotiations between parties wishing to contract RES bilaterally and outside of this mechanism; and (
  4. d)does not impact on the current plans for the continuation of the RES FiP auctions or any other mechanism already under consideration (e.g. Green Pool) but should work alongside these. CONSIDERATIONS OF POSSIBLE OPTIONS Such platform can range from a simple but easy-to-implement solution to a more ‘sophisticated’ but complex solution with various technical challenges. Regardless of the option, the platform should be non-discriminatory and offer equal access to all market participants – e.g. large and small-scale players, and all types and categories of offtakers. The platform should encourage participation in order to meet its overarching goal of enabling deployment of RES investments, allow the PPA market to mature and increase market-participants’ know-how. 13 Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT WHAT ARE THE KEY OBJECTIVES OF THE PPA PLATFORM? A mechanism that encourages participation in order to meet its overarching goal of enabling and accelerating deployment of RES investments KEY OBJECTIVES PRIORITY Increase maturity of PPA market - The platform should provide a space that promotes and supports bilateral negotiations between sellers and buyers of all categories – in time, this will inevitably increase market players’ know-how and experience - The proposed solution should also find a way to promote bankable options, e.g. by allowing the platform operator to monitor the PPA market without intervening while ensuring confidentiality of data and overall information provided Increase competition - The mechanism implemented should aim to create a more competitive PPA market that offers equal access to market participants – established as well as new or smaller players (buyers and sellers) - It should consider all offtake categories (utilities, traders, and corporate energy consumers) - Participation from small-scale players can be supported by allowing and/or incentivising aggregators to make use of the platform. However, regardless of the option selected, smaller-scale generators may not be competitive (due to economies of scale). To address competitiveness issues, regulatory measures, e.g. in the form of incentives or obligations, may need to be considered separately to the design of the RES PPA platform
(1)Limited market interference - The platform should avoid interference with current PPA negotiations between parties wishing to contract RES bilaterally – by not only setting the correct expectations upfront, but also finding a solution that can be implemented without delays - It should not intervene with the current plans for the continuation of the RES FiP auctions or other mechanisms under consideration – but it should provide an alternative route that enables the deployment of additional RES capacity beyond the existing routes
  1. For example these can include measures such as:mandating consumers/suppliers to contract a certain volume with small -scale RES or provide some form of incentives for concludin g PPAs with small-scale RES; an alternative route would be to make the RES FiP auctions geared towards small -scale RES, with effectively larger-scale projects moving towards the PPA route over time 14 Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT Agenda
  2. Executive Summary
  3. Introduction
  4. Option analysis
  5. Option assessment 15 Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT OPTIONS Three options are explored covering a range of possible solutions – from a simpler but easy-to-implement set-up to more complex mechanisms 1 A FACILITATING PLATFORM This is based on an anonymous platform that facilitates connection between parties interested in concluding RES PPAs. Bids and offers are anonymous and non-binding. Negotiations are concluded outside the platform between parties (sellers/buyers) that have expressed interest
(1). There could be an option to include a “soft flagging” procedure, based on an algorithm that assesses bids and offers, to solely notify sellers and buyers of possible matches with the aim to speed up the process. A FACILITATING PLATFORM WITH ENHANCED CHARACTERISTICS 2 This is based on a facilitating platform (as per Option 1) with additional features. These additional features can take the form of an exchange with pre-defined, standardised contract terms and ‘products’. Participants would have the option to participate in an anonymous manner with bids/offers and matching, once selected and confirmed, being binding. This ultimately creates the need for a third-party to act as a counterparty for both sellers and buyers, and for participants to provide guarantees or collateral following the matching of the offers, as a way to mitigate risk for the third-party entity. A PLATFORM WITH BINDING OFFERS AND AUTOMATED & AGGREGATED MATCHING 3 This is based on an automated matching process (for example via double-sided auctions) of binding bids and offers that require predefined, standardised contract terms and ‘products’. Instead of a one-to-one matching (as per Option 2) an algorithm would be aggregating all the various bids and offers and provide a single ‘optimal’ solution. As above, this ultimately creates a need for a third-party to execute separate contracts with the sellers and buyers, and for participants to provide guarantees or collateral, as a way to mitigate risk for the third-party entity. In this option, guarantees or collateral would need to be submitted in advance so that the algorithmic solution becomes binding. 1. A similar solution was introduced in Italy in March 2022 – please refer to the Annex for a description. 16 Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT 1 SUMMARY Option 1: Facilitating Create a marketplace to promote bilateral negotiations KEY CHARACTERISTICS AIM HIGH-LEVEL DESIGN 17 Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT - Option 1 has some similarities with the Italian PPA Bulletin Board implemented in March 2022 and follows some of its key principles with some additional, optional features. Please refer to the Annex for additional information. - The aim is to implement a centrally organised meeting place to promote bilateral negotiations between parties interested in the stipulation of long-term contracts for the sale of electricity from RES. Negotiations are performed outside of the platform. - The platform operator can use the platform to monitor the evolution of the RES PPA market through e.g. an obligation on the participants to register the PPA information once signed (for example, this is the case in Italy). This monitoring aspect could allow the platform operator to promote bankable solutions, monitor the competitiveness of the market and ultimately assess the mechanism against its objectives. - Participants (buyers and sellers) submit non-binding and anonymous buy/sell offers with the platform providing the flexibility to accept and register offers with varying PPA terms, as determined by the participants. - Participants have the option to either: 1) manually pick from the registry; or 2) utilise an automatic flagging procedure to express their interest in buy/sell offers as relevant; - In the second case, the platform automatically selects a number of registrations based on specific criteria and flags them to the relevant counterparty. Flagging criteria can vary – e.g. from simply matching volume and/or price terms to more sophisticated approaches such as the type of offtaker or type of RES asset. In any case, this should remain a simple solution, so it does not affect or delay implementation. - Once there is an expression of interest (from either the manual or automated procedure), parties can enter into bilateral negotiations outside of the platform. - Until parties enter into bilateral negotiations, anonymity of parties involved, and confidentiality of pricing and other terms need to be maintained and ensured by the platform operator. - There may be a requirement for participants to register contract details once parties sign a PPA – this can only be on the basis that confidentiality of information is maintained by the operator. 2 3 1 DEEP-DIVE Option 1: Facilitating Create a marketplace to promote bilateral negotiations KEY CONSIDERATIONS Participants No restrictions on the type of participants (sellers or buyers) to increase competition and liquidity (e.g. utilities, traders, corporate consumers, aggregators). Specifically in relation to the aggregators’ participation, this will allow small-scale RES projects or offtakers with limited demand to also benefit from such a platform. PPA types & terms Physical and financial contracts. Varying contracts terms and structures can be accommodated (e.g. price terms: fixed-price, variable price with/without cap/floor; volume terms: as-produced, shaped, fixed; contract duration: 5, 7 or 10 years, etc.), with sellers/buyers potentially allowed to offer a range of different options. However, some minimum requirements can be imposed – e.g. minimum total capacity per PPA, minimum contract duration, operation date of the asset or status, etc. Terms submitted in the platform are not binding – with bilateral negotiations conducted outside of the platform. Pre-qualification No need for strict pre-qualification criteria, but some type of participation guarantees may be required. The platform operator would need to ensure that the required, minimum information is submitted but is not responsible for the validity of such information. This would require time, effort and would delay the overall process
(1). Selection Given that the platform could offer a variety of options in relation to the PPA terms, a high utilisation could make a manual PPA search and selection process difficult considering the number of options available. Hence, a simplified ‘automatic flagging’ routine could also be implemented. This would take the form of a filtering process where, based on user input criteria, the platform would inform users on buy/sell offers closer to their preferences. Treatment of information Participants will be given access to selected information provided as part of the process (e.g. type and size of assets, contract duration, volume terms, etc.). To streamline further the PPA selection process some pricing information would also need to be included with the submission. To promote competitiveness, pricing information cannot be fully transparent. A possible workaround would be for sellers/buyers to submit either a floor/cap price (or a price range) and the flagging procedure to utilise that information to propose potential matches. Confidentiality Monitoring The platform would need to offer and protect anonymity to all users during the submission stage, and until users are notified about possible matches and proceed with negotiations. From then on, negotiations take place bilaterally outside of the platform. In case of monitoring activities, it is expected that a level of confidentiality would be enforced, especially in case of selected information becoming available in the public domain.
  1. Given the PPAs are concluded bilaterally outside the platform, this should not create any issues. 18 Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT 2 3 1 DEEP-DIVE Option 1: Facilitating Create a marketplace to promote bilateral negotiations EXAMPLE OF HOW OPTION 1 COULD WORK Admission to the platform sellers & buyers incl. participation guarantees Verification & admission platform operator - Example of sell offer from ‘seller A’ containing: Type of RES asset and status Total capacity of the RES asset (x MW) Start date Contract duration (z years) Total annual energy volume (y MWh) Volume profile (monthly & hour 1-24) Price terms (fixed price at α €/MWh) - Example of buy offer from ‘buyer B’ containing: Type of buyer Contract duration (z years) Total annual energy volume (y MWh) Volume profile (‘as-produced’) Price terms (fixed price at β €/MWh) Validity checks for minimum information submitted platform operator 19 Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT Offers published on the platform excl. full price terms Route 1 Manual selection e.g. buyer B interested in seller offer A as some of the key terms are desirable (for example contract duration and volume terms) Expression of interest from either party, with participants optionally including additional information (e.g. portfolio, previous contracts, etc.) Notification of seller/buyer platform operator Rejection or offer expiry Acceptance leading to negotiations outside of the platform Failure Success PPA signed between parties A & B Route 2 Automatic flagging procedure this mechanism highlights a possible match between seller offer A and buyer offer B and flags it to the relevant parties e.g. contract duration and volume terms match, and price terms α and β are within an acceptable range Key information and registration regarding the contract to the platform operator 2 3 1 SUMMARY Option 2: Facilitating with enhanced characteristics Allow bilateral negotiations and simplify process for less experienced players KEY CHARACTERISTICS AIM HIGH-LEVEL DESIGN 20 Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT - This second Option is building on Option 1, so the aim remains the same – i.e. to implement a centrally-organised meeting place to promote bilateral negotiations between parties interested in RES PPAs. - Option 2 is designed to offer some additional optional characteristics with the aim to support smaller or inexperienced players wanting to enter the PPA market. These features allow for direct ‘trading’ through the offering of pre-defined, standardised PPA contract terms and ‘products’ to help with liquidity and overall utilisation of the platform. - This option provides two possible routes for the participants: - Follow the procedure outlined in Option 1; or - Use the platform’s enhanced elements and submit bids (to buy) and offers (to sell) as relevant. - The second route can take the form of an exchange where, in an anonymous manner, participants (buyers and sellers) would select either offers or bids which, once selected and confirmed, are binding. The platform needs to include a number of pre-defined ‘products’ (e.g. fixed price under a certain volume profile, for 5- and 7-years duration). - A third-party (e.g. the platform operator) executes separate contracts with the sellers and buyers; in this case, participants need to go through a pre-qualification process and also provide guarantees or collateral following the matching of the offers, as a way to mitigate risk for the third-party entity. 2 3 1 DEEP-DIVE Option 2: Facilitating with enhanced characteristics Allow bilateral negotiations and simplify process for less experienced players KEY CONSIDERATIONS FOR THE ENHANCED ELEMENTS Participants The aim of this option is to allow participation for all types of players - as in Option
  2. However, there are some complexities introduced by the enhanced features and its binding nature that bypasses bilateral discussions. For example, the simplest approach would be that only Balancing Responsible Parties (RES producers/aggregators, consumers, suppliers and traders) participate as a first step (to maintain responsibilities of physical delivery of electricity). This, however, limits eligibility (and potentially excludes some corporate consumers) which would go against one of the main objectives of delivering such mechanism. To allow all the different types of market players to be able to participate in this enhanced option, solutions would need to be provided, such as: (a) establish an entity which would be responsible for managing and representing the physical volumes in the electricity markets (where this is needed – e.g. for corporate buyers); (b) or limit PPAs to financial contracts only. PPA types & terms As in Option 1, varying contracts terms can be accommodated. For the enhanced element to work, however, there is a need for predefined, standardised terms and ‘products’, to manage the number of options offered by the platform, until (at least) a certain level of liquidity and participation is achieved. These for example can include: - Pricing terms: fixed price PPAs only; - Volume terms: a profiling element would need to be included, which can vary based on the type of generator (wind and solar)
(1); and - Contract length: for example 5-, 7- and 10-year contracts only
(2). Pre-qualification Increased responsibility of the platform operator to ensure accuracy of data submitted, ahead of entering into a contract with sellers/buyers. A process would need to be implemented that does not create unnecessary delays. This can be further supported by introducing pre-qualification criteria for the participants. Platform’s role and guarantees The enhanced element of the platform would effectively act as an exchange offering long-term products for green electricity (with the platform assuming the role of buyer to each seller and seller to each buyer, for the financial settlement of transactions (central counterparty)). As a result, risk management becomes a key function of the platform (e.g. margin calls, guarantees or collateral). As an example, EEX has recently extended its Base Load Yearly futures to Cal+10 in an attempt to provide hedging for ‘green’ electricity – we do need to note, however, that these products are ‘baseload’ and effectively suggest a certain degree of ‘merchant’ (profiling) risk. However, margin requirements can place strains on (some) platform participants (especially small-scale players) and eventually hinder liquidity and limit participation. 1. The need for a volume profile could potentially increase market risk to certain RES generators that need to manage their p osition. │ 2. Durations are an example only. The key point is to offer a limited number of options in terms of contract duration (and other terms). 21 Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT 2 3 1 DEEP-DIVE Option 2: Facilitating with enhanced characteristics Allow bilateral negotiations and simplify process for less experienced players EXAMPLE OF HOW THE ENHANCED ELEMENTS OF OPTION 2 COULD WORK Admission to the platform sellers & buyers incl. stricter participation guarantees and/or entering a prequalification stage before being admitted Example of offer from ‘seller A’ based on predefined ‘products’
(1)(e.g. for a n-year, fixed price PPA under a predefined profile) - Type of RES asset and start date (wind, 2025) - Total capacity of the RES asset (x MW) and annual energy volume (x’ MWh) - Contract duration (n years) - Price terms (fixed price at α €/MWh) Selection of offers e.g. ‘buyer C’ selects the offer from seller A and automatically the platform is notified Notification the platform operator notifies seller A about the binding match Verification & admission platform operator Example of offer from ‘seller B’ based on predefined ‘products’
(1)(e.g. for a n-year, fixed price PPA under a predefined profile) - Type of RES asset and start date (solar PV, 2024) - Total capacity of the RES asset (y MW) and annual energy volume (y’ MWh) - Contract duration (n years) - Price terms (fixed price at β €/MWh)
  1. This example is for illustration purposes only. Offers can be submitted from sellers and buyers equally. 22 Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT Guarantees both parties, seller A and buyer C need to provide the necessary guarantees within a predetermined period from confirmation by the platform operator Final confirmation platform operator notifies the interested parties PPA platform operator enters into a contract separately with: Final verification within a predetermined timeframe the seller and buyer need to confirm the validity of the match before they submit any guarantees or collateral Seller A Buyer C 2 3 1 SUMMARY Option 3: Binding offers with automated & aggregated matching Provide standardised PPA ‘products’ to accelerate RES procurement KEY CHARACTERISTICS AIM HIGH-LEVEL DESIGN 23 Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT - Support smaller or less experienced players wanting to enter the PPA market through an automated matching that needs to include standardised contract terms and ‘products’. - Additionally, accelerate RES procurement through this automated process that needs to include provisions to eliminate counterparty risk – ultimately by-passing bilateral negotiations. - The key feature of such platform, at a high-level, is the implementation of a binding automating matching algorithm where a third-party would be executing separate contracts with the sellers and buyers. - For example, such an algorithm could function as follows: - Buyers submit (anonymously) the amount of energy they wish to procure and a cap (ceiling) price; - Sellers then enter into an auction-based platform where they are offering (anonymously) the energy that they wish to sell; - The algorithm then (in simple terms) attempts to maximise the difference between the cap (ceiling) price submitted by the buyers and the offer prices submitted by the sellers (whilst taking into account the submitted volumes as well) – optimising effectively the overall economic surplus. Once the algorithm matches the bids and offers (in an aggregated way) then these would be considered binding. - At its simplest, this option could be though of as the current Feed -in-Premium scheme. - A third-party (e.g. the platform operator) executes separate contracts with the sellers and buyers; in this case, participants need to go through a pre-qualification process and provide upfront guarantees or collateral, as a way to mitigate risk for the third-party entity. 2 3 1 DEEP-DIVE Option 3: Binding offers with automated & aggregated matching Provide standardised PPA ‘products’ to accelerate RES procurement KEY CONSIDERATIONS IN ADDITION TO THE ONES PROVIDED UNDER OPTIONS 1 AND 2 24 Optimisation algorithm Implementing an algorithm for these purposes can be challenging due to its multivariate nature (price, generation profiling, demand profiling). ‘One-to-one’ matching is most likely infeasible and as a result offers from both the buy and sell side would have to be aggregated. Still perfect matching would not be possible and how this is addressed should be a key consideration in the detailed design implementation. Even with aggregation, the resulting demand and supply curves would be three dimensional (price, quantity and time) with the least-cost solution being challenging to define (with potential high number of sub-optimal solutions). The process would take an auction-based format trying to maximise overall economic welfare. Frequency Such a platform could be very challenging to operate in a continuous manner. As a result, there would be a (limited) number of rounds per year when the platform operates. Contract types Each auction round would need to procure one type of PPAs – either physical or financial. As per Option 2, there is a need for predefined, standardised terms and ‘products’. RES technology To incentivise buyers to participate in such auctions, there needs to be clarity with regards to the profiling of the volume they are procuring. The RES-E auctions in Mexico and Colombia provide an example of how this can be achieved in a technology-neutral set up. In Mexico, sellers receive a small premium or discount based on the time of day they are generating (determined by regulatory set ‘hourly adjustment factors’). In Colombia, generators bid a minimum amount of packs of energy to be sold at a given price during all hours of one of three separate time blocks (00:00-07:00, 07:00-17:00, 17:00-00:00). Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT 2 3 1 OPTIONS SUMMARY High-level principles when considering the different options Option 2 Option 1 FACILITATING PLATFORM What are the types of PPAs? Are the offers binding? Is there automated matching? Do bids and offers remain anonymous? Is there a need for standard terms or products? Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT Physical or Financial additional solutions may need to be provided by the platform for physical contracts with corporate buyers both can be accommodated and addressed during the negotiations No both can be accommodated but in separate processes Yes (for some) PPAs are agreed bilaterally and outside of the platform Yes once offers/bids selected No Yes a ‘flagging’ feature can facilitate search process Partially until reaching negotiations stage – i.e. after expression of interest No different types of contract and term structures can be accommodated depends on the exact solution – some type of participation guarantees may be required
  2. Assessment for the enhanced characteristics only – as everything else is following the assessment of Option 1 25 PLATFORM WITH BINDING OFFERS AND AUTOMATED MATCHING Physical and Financial Physical and Financial Potentially Is there a need for guarantees or collaterals? Option 3 FOCUSING ON THE ENHANCED CHARACTERISTICS ONLY
(1)Yes Yes need for pre-defined contract term structures and ‘products’ Yes guarantees or collaterals, as a way to mitigate risk for the third-party entity that acts as the counterparty for sellers/buyers – although these are submitted at different stages in each Option 2 3 Agenda
  1. Executive Summary
  2. Introduction
  3. Option analysis
  4. Option assessment 26 Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT HOW DO THE DIFFERENT OPTIONS MEET THE OVERALL OBJECTIVES? Assessing the three options against the underlying objectives KEY OBJECTIVES & PRIORITIES Increase maturity of PPA market Increase competition Limited market interference 27 Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT OPTION 1 FACILITATING ✓ A key objective of this is to promote bilateral negotiations among all market participants which is key in creating a more mature RES PPA market ✓ A centralised marketplace can increase competition but not all types of players would necessarily benefit equally. Wide participation will be key for this objective. Measures can help support smaller players (e.g. participation through aggregators) ✓ An option that, by design, does not interfere with other market mechanisms, allowing the PPA market to grow organically OPTION 2 FACILITATING WITH ENHANCED CHARACTERISTICS ✓ The additional feature that includes an exchange with standardised term structures and contracts and a thirdparty entity acting as the counterparty for buyers/sellers could mean slower market-player knowhow development ✓ Eliminating counterparty risk and offering standardised term structures and contracts could allow all participants to benefit equally, including smaller players or players (buyers/sellers) with limited market experience ✓ The additional feature that provides guarantor incentives could potentially delay current initiatives. Clarity on the required levels of guarantees or collateral that mitigate risk for the third-party entity is needed to manage such risk 0PTION 3 BINDING OFFERS WITH AUTOMATED & AGGREGATED MATCHING x This option primarily provides an alternative market risk mitigation mechanism, but does not necessarily increase marketplayer know-how ✓ Eliminating counterparty risk and offering standardised term structures and contracts could allow all participants to benefit equally, including smaller players or players (buyers/sellers) with limited market experience x Interfering with the wider PPA market as it is offers an alternative route that has a greater chance of delaying or affecting other initiatives 1 ASSESSING THE STRENGTHS AND WEAKNESSES Option 1: Facilitating Create a marketplace to promote bilateral negotiations PROS & CONS ANALYSIS - Option 1 offers a simpler mechanism to implement that can be developed in a shorter timeframe. - It provides flexibility in terms of types of participants, types of contracts and it can accommodate a range of contract terms, structures and options. - It does not interfere with the wider PPA market, current initiatives, or impact on other mechanisms (i.e. RES FiP auctions); it is designed to encourage bilateral negotiations. - High utilisation can ensure a PPA market that is maturing and growing, while increasing marketplayers’ know-how and experience. - 28 Through monitoring activities and requirements, the platform operator can use the information to promote bankable solutions, monitor the competitiveness of the market and overall assess the mechanism against its objectives. Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT PROS CONS - Regardless of the option selected, the platform operator would need to ensure that the right incentives are provided to market participants in order to ensure high utilisation. - For Option 1, if the platform is not used more extensively, there is a risk that only limited RES volumes are delivered via this mechanism. - This Option 1 does not explicitly address issues that smaller players or less experienced sellers/buyers are facing (e.g. counterparty risk, competitiveness of smaller-scale projects); although some simple solutions can be provided at least until the PPA market becomes more mature (e.g. a PPA template with options on volume/ price terms, participation through aggregators). 2 3 1 ASSESSING THE STRENGTHS AND WEAKNESSES Option 2: Facilitating with enhanced characteristics Allow bilateral negotiations and simplify process for less experienced players PROS & CONS ANALYSIS FOCUSING ON THE ENHANCED ELEMENTS
(1)- The enhanced elements of Option 2 can offer some additional advantages once implemented; it can create a route that delivers RES volumes faster by by-passing bilateral negotiations (though this also relies on the terms and structure of the standardised products on offer). - It can provide an alternative route to smaller sellers/buyers or less experienced players through offering pre-defined standardised contract terms and options, and by eliminating counterparty risk (backed by an appropriate level of guarantees or collateral). 1. This slide lists the additional pros and cons compared to Option 1 – the majority of the items described under Option 1 are s till valid here. Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT The enhanced elements, e.g. the need for some form of standardisation or for an entity to act as the counterparty or to address requirements that physical contracts introduce in relation to BRPs, could increase complexity in terms of implementation, delaying overall timeframes. A way around this would be to first implement the simpler facilitating platform (Option 1) and develop the enhanced elements at a later stage (Option 2), following market signals. - Once implemented, there could be some additional upfront administrative requirements from platform operator (validations, pre-qualification, guarantees). - This new route-to-market could delay ongoing negotiations and initiatives while market participants are waiting for its implementation. Clarity is needed in due course in terms of the role of the platform, its offerings, and requirements so that market participants can take informed decisions. PROS CONS 29 - 2 3 1 ASSESSING THE STRENGTHS AND WEAKNESSES Option 3: Binding offers with automated & aggregated matching Provide standardised PPA ‘products’ to accelerate RES procurement PROS & CONS ANALYSIS - As is the case with Option 2, Option 3 could create a route that delivers RES volumes faster by bypassing bilateral negotiations. - It can provide an alternative route to smaller sellers/buyers or less experienced players through offering pre-defined standardised contract terms and options, and by eliminating counterparty risk (backed by an appropriate level of guarantees or collateral). Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT This option primarily provides an alternative market risk mitigation mechanism, but it does not necessarily increase market-player know-how and it does not create a tool for developing a fully functioning decentralised PPA market in Greece, which is a primary objective. - The automated matching elements, e.g. the need for some form of standardisation or for an entity to act as the counterparty or the need for an algorithm with increased complexities surrounding how buyers and sellers are aggregated, could increase complexity in terms of implementation, delaying overall timeframes. - Once implemented, there could be some additional upfront administrative requirements from platform operator (validations, pre-qualification, guarantees). - This new route-to-market could delay ongoing negotiations and initiatives while market participants are waiting for its implementation. Clarity is needed in due course in terms of the role of the platform, its offerings, and requirements so that market participants can take informed decisions. PROS CONS 30 - 2 3 RECOMMENDATIONS Consider Option 1 as a first step, and wait for market signals to assess whether the enhanced elements of Option 2 need to be developed in order to further support the PPA market RECOMMENDATIONS − Option 1 is a relatively easy-to-implement solution, requiring less time to be fully developed – while also meeting the core objectives of such a mechanism. Our view is that a facilitating platform could be developed as a first step to gauge market interest and appetite from sellers/buyers to participate. − Following the implementation of such solution and as part of the monitoring activities of the platform operator, there may be a signal for the enhanced elements of Option 2 to be developed – for example these may be necessary to unlock further RES capacity over the next 6-8 years, or consider how smaller-scale RES projects can also benefit from such a mechanism. − Option 3 would be challenging to implement and should mainly be considered in certain markets with specific characteristic, e.g. in markets with low RES penetration levels. In our view, a solution similar to Option 3 would not offer much benefit to the Greek market. − Finally, time is of essence and all stakeholders need to act fast for such a solution to produce positive results. 31 Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT Annex A. European overview examples B. Example: the Italian ’PPA Bulletin Board’ 33 Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT EUROPEAN OVERVIEW EXAMPLES Market characteristics Indication of maturity of PPA markets: established emerging Norway Public credit guarantee scheme in place for PPAs Lack of support (driven by the uncertainty and price collapse of the Green Certificates) The Netherlands Supported assets under the SDE++ mechanism entering into (c)PPAs to hedge against price risk driven by the mechanism’s base energy price (i.e. floor) that caps remuneration GoOs issued to all RES assets Spain 10% PPA sourcing (or similar instruments) obligation for electrointensive consumers with the state offering credit risk insurance and guarantees - with guarantees financed through the Reserve Fund for Guarantees of Electro-intensive Entities Min and a max amount of energy to be delivered within contract period GoOS issued to all RES assets, tradable across borders only for unsupported assets Poland The previous Green Certificate support scheme incentivising assets to enter into long-term contracts looking for a ‘route to market’ GoOs issued to all RES assets Mexico RES-E auctions
(1)Multi-technology auctions whereby packages of three products were auctioned (capacity, electricity generation and Clean Energy Certificates) – aiming to encourage new investments contributing to the fulfilment of environmental goals and to the achievement of competitive electricity prices with private market participants allowed to participate in the later auctions Italy EEX EEX extended Base Load Yearly futures to Cal+10 on 27 September 2021 in markets with high potential of PPA activities In March 2022 introduced a PPA ‘platform’ that links supply and demand aiming to facilitate bilateral agreements GoOs issued to all RES assets
  1. Latest RES-E auction was in
  2. The scheme was generally regarded as successful having managed to procure around 7.5GW of R ES capacity (with 70% being operational). 34 Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT Annex A. European overview examples B. Example: the Italian ’PPA Bulletin Board’ 35 Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT PPA PLATFORM REAL LIFE EXAMPLE Case Study – A facilitating platform: Example based on the Italian case ’PPA Bulletin Board’ following publication of the regulation on 30 March 2022 KEY CHARACTERISTICS AIM - The bulletin board of long-term energy contracts from renewable sources (PPA BULLETIN BOARD) is organised and managed by GME (Gestore dei Mercati Energetici S.p.A) Aim - With the aim of promoting the meeting between parties potentially interested in the stipulation of long-term contracts for the sale of electricity from renewable sources, as well as to allow the fulfilment of the obligation to register the same contracts concluded between the participants Overview PPA BULLETIN BOARD - Notice Section: participants interested in proposing or seeking long-term contracts for the purchase and sale of electricity from renewable sources can publish, in anonymous and nonbinding form, their notices, respectively, of sale or purchase, while participants interested in such notices can view them and express their interest Other characteristics - Contract Registration Section: the selling participants fulfil the obligation to register longterm contracts for the purchase and sale of electricity from renewable sources concluded (with GME maintaining confidentiality and publishing the information on an aggregate basis) OTHER CHARACTERISTICS - Physical PPAs (utility, trader and/ or corporate) for unsupported assets with a minimum duration of 5 years - Total capacity of at least 1MW - Participants pay an access fee and a fixed annual fee to GME for the services provided
(1)1. At the time of writing, these fees are set at zero Euros 36 Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT PPA PLATFORM REAL LIFE EXAMPLE Case Study – A facilitating platform: Example based on the Italian case ’PPA Bulletin Board’ following publication of the regulation on 30 March 2022 NOTICE SECTION
(1)Admission to the PPA Bulletin Board & membership contractt sellers & buyers a. b. c. d. e. f. g. h. Verification & admission company name & registered office to be published on GME website Obligation on participants to communicate related changes Sales notice containing Contract duration & starting date Production profile Total capacity of asset(s) (MW) Total quantity (MWh) Plants covered by the notice Type of RES asset Plant status & expected commercial operations date Expiration date of notice Modifications & cancellations of notices allowed Validity checks carried by GME notice submitted as per procedures and terms Sales notice containing optionally price (fixed or variable/ indexed), incl. for GoOS, other information re. asset/ notice a. b. c. d. Purchase notice containing Contract duration Production profile Total quantity (MWh) Expiration date of notice Purchase notice containing optionally capacity, operational role, previous contracts, customer portfolio, price (fixed or variable/ indexed), incl. for GoOs, other Notices published on the PPA Bulletin Board (anonymously) Participants remain responsible for the accuracy & truthfulness of information presented 1. Based on the Technical Rules and the Regulation of the PPA Bulletin Board available on the GME website 37 Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT Expression of interest for sales notices participants can include info on operation role, previous contracts, customer portfolio Acceptance leading to negotiations Rejection PPA Bulletin Board to notify the seller/ buyer linked to the notice incl. the additional information Modifications & cancellations allowed with the PPA Bulletin Board notifying the relevant ‘interested’ parties Notice expiry Participants obliged to keep information confidential PPA PLATFORM REAL LIFE EXAMPLE Case Study – A facilitating platform: Example based on the Italian case ’PPA Bulletin Board’ following publication of the regulation on 30 March 2022 CONTRACT REGISTRATION SECTION
(1)Registration is carried out by seller incl. penalties for non-compliance Minimum information to be provided a. Counterparty b. Contract duration & starting date c. Production profile d. Price e. Total quantity (MWh) f. Plants covered by the contract g. Type of RES asset h. Total capacity of assets (MW) i. Plant status & expected commercial operations date j. Geographical location of assets Optional information other information re. the asset or contract Validity of registrations carried by GME registration submitted as per procedures Sellers responsible for the accuracy & truthfulness for information relating to the contracts Modifications & cancellations allowed
  1. Based on the Technical Rules and the Regulation of the PPA Bulletin Board available on the GME website 38 Sep 2022 | COPYRIGHT AFRY AB | AFRY REPORT Successful GME publishes, on a monthly basis, in aggregate anonymous form the number and total quantities covered by the contracts registered to the ’PPA Bulletin Board broken down by capacity & contract duration RES CPPAs platform }}} - Benchmarking of EU benchmarking - Greek CPPA Market estimation October 2022 Scope of Work Go Beyond. Move forward together 2 Background - Scope of Work This study was conducted by the Energy Sector of Grant Thornton Greece. In an environment where RES CPPAs are emerging both as a RES financing tool and as a means of energy supply or hedging tool, the Greek Energy Market Operator (“HEnEx”) has assigned Grant Thornton a study with a two objectives: ➢ Investigate current European CPPA markets, to assess the role of possible enablers and barriers towards CPPA uptake. ➢ Provide an informed estimate regarding the growth potential of the emerging Greek CPPA Market. The present study did not look into design parameters of centrally operated platforms. The methodology and outcomes of the two workstreams are herein provided in the form of an Executive Summary. There’s power in a new normal. We help you find yours. 3 EU Benchmarking Executive Summary Go Beyond. Move forward together 4 Overview EU CPPA Market Benchmarking In this first part of the study, we analysed and compared 5 selected countries chosen under certain criteria, in order to assess the conditions under which, in some countries a rapid development of their CPPA markets is observed, compared with others which experienced a less rapid growth. The initial criteria for country selection were similarities regarding RES development and future targets, but eventual differentiation regarding the success of CPPA market development. The criteria were expanded to include measures regarding CPPA promoting policies and power system indicators such as energy demand, levels of energy peaks and price cannibalization occurrences. In the analysis we undertook a high-level assessment of the effect of six selected drivers, which are considered to play a major role in the CPPA market development. Go Beyond. Move forward together 5 CPPA Markets to study Which countries were examined and why? Italy Spain Romania • We started our analysis comparing Italy and Spain as they present market similarities in terms of volumes of installed RES, levels of peak demand and evolution of regulatory framework and RES targets. The two countries although started from a similar initial point, they de-coupled in the evolution of their CPPA market with the second becoming a leader of the market while the first remained anchored. • We proceeded to study Romania as a slow pacer in RES uptake. Although Romania’s RES development halted after 2014, latest policy developments along with the permission of CPPAs, may trigger their uptake. Romania has also plans for a platform facilitating PPAs. Poland • In our study we also chose another leader in RES development to investigate (Germany), as well a smaller country with an emerging CPPA market (Poland) for further diversification Germany There’s power in a new normal. We help you find yours. 6 CPPA Market Drivers What main drivers are assumed to affect the uptake of a CPPAs and how? RES Development Targets Levelized Cost of Energy Increased future installed capacity targets for RES means a larger potential for RES CPPA contracting. Low LCOE for RES is expected to positively impact the RES CPPA markets. Regulatory Status Regulations can be directly favorable to CPPAs (i.e. net pool, quotas of CPPAs in final consumption, support of “sleeving” costs) or indirectly (by increased uncertainty for auctions) Market Status/Prices High market prices (for example due to current energy crisis) drive RES CPPA demand. Auction Prices Low auction prices can lead RES producers to CPPAs instead of FiT/FiP Price Cannibalization Price cannibalization is a parameter that may lead producers to CPPAs in order to decrease uncertainty of fixed cash flows. There’s power in a new normal. We help you find yours. 7 Italy - Overview Executive summary of the Italian CPPA market
  2. Strong policy incentives drove the development of Italian RES capacity until
  4. After the halt of their increasing development due to end of high incentivizing policies, new capacity installments were mainly driven by auctions
  5. In latest auctions there was very low participation due to authorization process criteria and regulatory barriers Levelized Cost of Energy RES Development Targets The continuously decreasing participation in auctions could suggest a possibility of commercially viable subsidy-free RES, motivated by alternate offtake solutions, such as CPPAs. Regulatory Status
  6. Low LCOE of PV projects make them attractive to investors.
  7. High energy crisis-driven electricity prices (2021 PUN: 125,46 €/MWh, 2022: 259,53 €/MWh) make CPPAs attractive to off-takers
  8. Auction prices (63,61 €/MWh in FER1) being above the CPPA prices (51,5 € /MWh) make auctions more attractive to producers. Nevertheless, regulatory barriers and increasing off-taker demand can promote the CPPA market uptake.
  9. The newly introduced GME Bulletin Board initiative for CPPA promotion has already 63 participants and other CPPA platforms such as LevelTen report large Italian participation (27% of total EUparticipation) Market Status/Prices Auction Prices Price Cannibalization The trends suggest a possible uptake in the Italian CPPA market. Nevertheless, as long as auction prices remain above CPPA prices producers will favor them less, stalling the CPPA market development. There’s power in a new normal. We help you find yours. 8 Spain - Overview Executive summary of the Spanish CPPA market
  10. Strong policy incentives drove the development of Spanish RES capacity until
  12. After the halt of their increasing development due to end of high incentivizing policies, big capacity installments were realized by state-held auctions in 2016 and 2017
  13. Uncertainties induced by the retroactive cuts on FITs and the absence of further state-held auctions after 2017 led project owners to seek alternative offtake structures leading to first CPPAs in 2018
  14. Latest policies promote CPPAs as they motivate via fiscal incentives, large industries to cover their demand by renewable quotas contracted via CPPAs. They also increase CPPA attractiveness by covering credit risks (FERGEI) , as well as by excluding CPPA contracted energy revenues from being withheld by the clawback mechanism Levelized Cost of Energy RES Development Targets Regulatory Status
  15. Continuously decreasing LCOE of PV projects is making them attractive to investors.
  16. High energy crisis-driven electricity prices make CPPAs attractive to off-takers.
  17. Low auction prices (25 €/MWh in 2021) being below the CPPA prices (39,5 € /MWh) make the latter attractive to producers. The large oversubscription in auctions creates a big hub of possible future CPPA - contracted RES development.
  18. Increase in frequency of Price Cannibalization effects further motivates producers to hedge against uncertainties using CPPAs. Nevertheless, it could pose a detrimental factor to further RES investments in extreme cases. Auction Prices The quite favorable conditions in Spanish CPPA market in Spain, will enable further growth in its already leading role in EU, as the combination of high energy-crisis driven MCP prices (even after the intervention mechanism), the low RES LCOE and the regulatory promotive measures of CPPAs, has made them an attractive solution for both producers and off-takers, establishing the foundations for further market development. Price Cannibalization Market Status/Prices There’s power in a new normal. We help you find yours. 9 Romania - Overview Executive summary of the Romanian CPPA market
  19. Strong policy incentives drove the development of Romanian RES capacity until
  21. After the end of high incentivizing policies and the resulting difficulties over GCs usage, the RES market presents a stable picture related to the loss of interest of investors.
  22. Latest policy amendments create an opportunity for CPPA market uptake Levelized Cost of Energy RES Development Targets Regulatory Status
  23. Cost competitive RES project potential makes them attractive to investors.
  24. High energy crisis-driven electricity prices make CPPAs attractive to off-takers.
  25. Increase in frequency of Price Cannibalization effects may further motivate producers to hedge against uncertainties using CPPAs. Nevertheless, it could pose a detrimental factor to further RES investments in extreme cases. The Romanian CPPA market, having just emerged by its first signed contract is a market to watch. Further policy uptake actions, combined with the existing RES potential and the current market drivers (high energy prices and need for hedging in price volatility) may further facilitate its growth. Market Status/Prices Auction Prices Price Cannibalization There’s power in a new normal. We help you find yours. 10 Poland - Overview Executive summary of the Polish CPPA market
  26. Policy incentives drove the development of Polish RES capacity. Levelized Cost of Energy
  27. Timely policy changes continued RES development after 2014 difficulties.
  28. Continuously decreasing LCOE of RES projects makes them attractive to investors.
  29. High energy crisis-driven electricity prices make CPPAs attractive to offtakers.
  30. Auction prices being above the CPPA prices make the latter less attractive to producers. The latest large participation in auctions creates a favorable future for CPPAs. Recent high energy prices combined with the cessation of natural gas imports from Russia, led to high CPPA prices (high latest prices in platforms such as LevelTen), increasing sellers’ profitability. High subsidized RES environment reduces the CPPA attractiveness. Nevertheless, the decreasing RES LCOEs and the latest conditions driven by the energy crisis , are leading to high demand for RES projects (both on seller side and for off-taker), and may lead to a continuous growth for the CPPA market. RES Development Targets Regulatory Status Market Status/Prices Auction Prices Price Cannibalization There’s power in a new normal. We help you find yours. 11 Germany - Overview Executive summary of the German CPPA market
  31. Germany has the leading role in Renewable energy development in Europe. Early policy uptake, incentivization and ambitious targets lead to successful development over the past 30 years.
  32. Transition to auction schemes after 2014 let grid expansion keep up with RES development.
  33. Price Cannibalization was addressed by end-consumer surcharges and incentives to power producer profile compliance. Latest moves towards subsidy free offshore developments and end user surcharge reductions indicate a favorable environment for CPPA uptake as the latter pose subsidy –free options. Levelized Cost of Energy RES Development Targets
  34. Continuously decreasing LCOE of RES projects make them attractive to investors. In 2021 auctions, zero-subsidy projects won the tenders, indicating very low development costs and project viability by solely market participation.
  35. High energy crisis-driven electricity prices make CPPA attractive to off-takers.
  36. Low auction prices (40 to 55 €/MWh in 2022) falling below the CPPA prices (60 € /MWh) make the latter attractive to producers.
  37. The latest policy developments (Easter package) foresee a massive renewable energy development with highly increased targets in installed capacity and final renewable electricity consumption.
  38. Private Companies (such as Trianel) show interest towards small tenor CPPAs for small projects such as household rooftop PVs Auction Prices Germany, being a leader in Renewable energy development in Europe, has set ambitious targets for both the near and the long-term future. The highly energy crisis driven prices, the low auction prices and the low CPPA prices, create a favorable environment for CPPA market growth. The further developments regarding subsidy – free offshore developments, along with the initiatives for end-user surcharge alleviation also support CPPA contracting. The latest increase of German market share in European CPPA contracting (ranking 5th in EU) may further continue and as well give her soon higher ranking position. Price Cannibalization Regulatory Status Market Status/Prices There’s power in a new normal. We help you find yours. 12 Country Comparison How are Italy, Spain, Romania, Poland and Germany compared regarding the main CPPA market drivers? CPPA Market Driver Romania Italy Poland Germany Spain Levelized Cost of Energy RES Development Regulatory Status Market Status/Prices Auction Prices Price Cannibalization Overall Assessment There’s power in a new normal. We help you find yours. 13 Market outlook for Greece – High level qualitative assessment Parameter assessment for Greece Levelized Cost of Energy Positive RES Development Targets Positive Regulatory Status Negative Market Status/Prices Positive Auction Prices Positive Price Cannibalization Neutral There’s power in a new normal. We help you find yours. 14 Recommendations Main recommendations for the uptake of the CPPA market in Greece
  39. Policy uptake in form of fiscal incentives deriving from CPPA shares in final energy consumption would benefit the CPPA market uptake (an example of such incentive is the 10% quota for industrial consumers in Spain).
  40. Secondary mechanisms in order to support the CPPA market should be designed, especially regarding guarantees and creditworthiness of the off-taker (this has also been implemented in Spain with the FERGEI).
  41. RES auctions can become a barrier for CPPA markets. Regulatory interventions reducing the volume or starting price of tenders could help in the uptake of CPPA market.
  42. RES development policies should be oriented towards subsidy-free solutions whenever it is possible(for example policies regarding the offshore wind projects in Germany).
  43. A digital platform that joins interested parties as well as allows the simplification/automation of CPPA contracting is expected to make CPPAs an attractive option.
  44. Standardized CPPAs contracts/products should be designed in order to reduce contracting costs for smaller players
  45. Simplification and acceleration of permitting procedures for new RES projects.
  46. Campaigns for the promotion of the benefits deriving from signing CPPAs (and understanding of risks).
  47. CPPAs must be also made available to small/medium sized consumers via consumer aggregation (multiple consumers signing a CPPA with one producer). There’s power in a new normal. We help you find yours. 15 Greek RES CPPA Market Size Estimation Executive Summary Go Beyond. Move forward together 16 Overview Greek RES CPPA Market size estimation In this study, we have assessed the growth potential of the Greek RES CPPA market. In order to do so, we first conducted an in-depth analysis of the current RES landscape (capacity, regulation, cost, price signals, system integration). In order to proceed with the estimation of the mid-term PPA market size in Greece, we first identified the RES capacity expected to be installed under the current “paradigm” (FiT/state CfDs). While in the 2010-2020 decade “demand” for RES was almost solely state-driven (procured auctions and/or grid enhancement), currently, an additional market demand has substantiated on top of the policy-based demand. • To this end, we performed a “demand-supply” assessment for the additional CPPA-driven RES, which indicates the growth potential of the Greek RES-CPPA Market. • A “stakeholder appetite” assessment was conducted in order to derive key variables prominent to affect the PPA market growth • On the supply-side, we constructed two scenarios regarding the electrical space availability & RES development stack • On the demand-side, we constructed two scenarios regarding the potential “PPA appetite” if involved stakeholders • The outcome of the study was an expected low-high range regarding the growth of the Greek CPPA Market, a “most likely” projection, as well as qualitative conclusions that could/would affect the PPA market growth in Greece. Go Beyond. Move forward together 17 Methodology Market-driven RES projection Greek RES PPA Market size estimation Demand vs Supply (volumes) The study derived estimations of the Greek CPPA Market size for the next 5 years (upon Q3-Q4 2027) • Demand (“D”): Stakeholder analysis indicates that Demand for PPAs, is directly or indirectly bound on industrial consumers’ consumption level • Supply (“S”): Mostly bound on maximum annual installation rate (large RES potential and development stack) Derivation Process Technical Limit for new Installations / year Residual Space Policy Marketdriven 𝑦𝑒𝑎𝑟 𝑦𝑒𝑎𝑟 𝑦𝑒𝑎𝑟 • 𝑅𝐸𝑆𝑐𝑃𝑃𝐴 = min(𝐷𝑝𝑝𝑎 , 𝑆𝑝𝑝𝑎 ) Policy-driven RES projection Small Projects (state FiT): Date of Final Connection terms with DSO +12-15 months Installed Larger Projects (state CfD): Date of Auction Results (2018 to 2022) + “delivery time” (depending on technology and project size). +40 months +12 months There’s power in a new normal. We help you find yours. 18 Scenarios analysed Greek RES CPPA Market size estimation Baseline scenario • No significant changes in regulatory framework • International markets recoil to almost pre-covid conditions Accelerated scenario • RES-accelerating initiatives • Green Pool/shaping cost subsidization • (some form of) State guarantee for counter-party risk • Matchmaking (with or without clearance) PPA platform • Industrial “green-obligation” (e.g. 20%) • Market volatility and uncertainty (including high gas prices) persist • New market equilibrium, when achieved, far from pre-covid status There’s power in a new normal. We help you find yours. 19 Findings (1/4) Prospects of the Greek CPPA Market Under the assumptions and derivation methodology of this study (both qualitative and quantitative), the PPA market in Greece is and will be closely related to the industrial demand, either directly (industrial CPPAs) or indirectly (through vertically integrated suppliers). • This projection assumes no significant lag in the PPA market chain: timely negotiation, contract, funding, legislative applications and decisions, construction, commissioning, operation. • The growth of the PPA Market in Greece is considered to be a certainty, regardless of international and/or national conditions: • The energy crisis has triggered an urgent hedging necessity on behalf of the industry. Even if the crisis completely vanishes, the initial signal has irreversibly changed the perception of both RES financing and Offtakers’ portfolios regarding energy risk management. • International experience so far has showed that, the first steps in a PPA market are made by larger Offtakers. This can either mean “large-to-large”, or “large-to-many” arrangements, depending on the country’s RES-seggragation (i.e. if and how many large scale projects are available e.g. Offshore/large-scale wind). There’s power in a new normal. We help you find yours. 20 Findings (2/4) Greek CPPA Market growth By superimposing demand and supply on the constructed scenarios, the expected low-high range of the overall Greek PPA market is extracted, as shown in the graphs below. These results indicate the market’s intention, regarding PPA activation date (CoD of RES project). • Market’s intentions meaning, there is zero lag between the date of decision over a PPA (for an under development project), and the date when the PPA is signed, which in turn, provides timely funding, timely installation, commissioning, commercial operation. Accelerated Scenario: PPA Market Growth (market intention) Baseline Scenario: PPA Market Growth (market intention) High Low GWh-year 2.000 1.000 High Ιουλ-27 Μαρ-27 Νοε-26 Ιουλ-26 Μαρ-26 Νοε-25 Ιουλ-25 Μαρ-25 0 Νοε-24 Ιουλ-27 Μαρ-27 Νοε-26 Ιουλ-26 Μαρ-26 Νοε-25 Ιουλ-25 Μαρ-25 Νοε-24 Ιουλ-24 Μαρ-24 Νοε-23 Ιουλ-23 Μαρ-23 0 Νοε-22 0 3.000 Ιουλ-24 1.000 4.000 Μαρ-24 2.000 1 5.000 Νοε-23 3.000 6.000 Ιουλ-23 2 7.000 Μαρ-23 4.000 GW-contracted 5.000 3 GWh-year 6.000 Ιουλ-22 GW-contracted 4 5 4,5 4 3,5 3 2,5 2 1,5 1 0,5 0 Νοε-22 7.000 Ιουλ-22 5 Low There’s power in a new normal. We help you find yours. 21 Findings (3/4) Greek CPPA Market growth Our “maximum-likelihood” estimation is, that the Greek PPA Market will advance towards the “high” boundary of the Baseline scenario (~ 3.6TWh annually/ ~2.4GW, by Autumn ‘27), because: 2,5 3.500 2.500 1,5 2.000 1.500 1,0 GWh-annually 3.000 2,0 1.000 0,5 500 Οκτ-2027 Ιουλ-2027 Απρ-2027 Ιαν-2027 Οκτ-2026 Ιουλ-2026 Απρ-2026 Ιαν-2026 Οκτ-2025 Ιουλ-2025 Απρ-2025 Ιαν-2025 Οκτ-2024 Ιουλ-2024 Απρ-2024 Ιαν-2024 Οκτ-2023 Ιουλ-2023 Απρ-2023 0 Ιαν-2023 0,0 Οκτ-2022 • Even when the global energy markets stabilize, certainty will be no longer a given, but rather a goal: RES provide secure, low-cost, long-term energy hedging for Offtakers. 4.000 Ιουλ-2022 • The resulting high gas and power prices, will continue to push Offtakers towards entering CPPAs for a larger and larger share of their position due to the RES-to-gas price differential. PPA Market Growth: Maximum Likelihood Perception GW-contracted • The SARS-Cov2 Pandemic, and the energy crisis and geopolitical turmoil that followed, has triggered semipermanent disturbances in the natural gas supply chain, which will not only need years to recover, but it is highly questionable whether it will ever achieve procrisis levels. There’s power in a new normal. We help you find yours. 22 Findings (4/4) Greek RES Installed Capacity Projections Our “maximum-likelihood” estimation regarding policy-driven and market-driven RES development in the next 5-year horizon, results to a total RES capacity of a little over 15GW (wind & solar), by Autumn ‘
  48. RES Capacity Evolution (Wind & Solar) GW • This discourse with the TSO’s projections is performed as a “sanity check”, not in terms of methodological approach, but in terms of a soft benchmark regarding grid integration feasibility. 16 14,35 15,03 2026 2027 12,99 14 11,12 12 10 14,96 9,69 8 6 4 2 0 2022 2023 Installed ('22) 2024 Policy 2025 CPPAs Total RES (ADMIE high) There’s power in a new normal. We help you find yours. 23 Conclusions Opportunities Initiatives such as: • the Green Pool Aggregator, • PPA contract standardization, • “match-making” platforms, • PPA-clearing platforms, → are worth -and require- further exploring, since they could further accelerate the Greek CPPA market, either by reducing “frictions” to an already present market, or by inducing demand to a less keen market. → Thus, not only providing assisting tools for market growth, but effectively accelerating the Green Transition and the path towards a net-zero electric system. There’s power in a new normal. We help you find yours. 24 © 2022 Grant Thornton. All rights reserved. ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Greece is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL and its member firms are not agents of, and do not obligate, one another and are not liable for one another’s acts or omissions. grant-thornton.gr

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