cPPA - comprehensive support for businesses

Situation:

The Client was a main player from the retail sector with significant electricity consumption and over 8000 connection points. The Company has expressed ambitious ESG plans targeting reduction of emissions in scope 1 and 2 by 25% by 2026 and even more ambitious targets in following years. 

Challenges:

[Complex ownership] The complexity of the structure in the franchisee business model and the ownership of the stores proved a challenge in structuring the cPPA for the Company. Prior to contracting PwC the company was leaning towards a physical PPA solution as something more fit for the business goals. 

[Volatile market conditions] Furthermore the company was pursuing cPPA in the times of most volatile electricity price changes in the Polish market that were partially caused by Russia-Ukraine military conflict. 

Solution:

PwC as lead advisor prepared development of a strategy to support the purchase of electricity from RES - using cPPA and support in its operationalization. As a result of our initial work the Company has selected virtual PPA as a leading solution. Furthermore PwC has advised end-to-end on securing cPPA contracts in course of negotiations that took many months to complete. Due to this project:

• Client has successfully signed two cPPA for the volume above 2 TWh over the life of the contracts
• Undersigned contracts which price was > 30% lower than those sourced  
• Fulfillment of ESG plans
• Ensure long term hedge of electricity price

Situation:

The fund has decided to explore possibility of undersigining cPPA for its wind farm portfolio in Poland. In course of the project the company assessed that this solution provides a viable opportunity to de-risk the project, hedge revenues for a long time and boost overall revenues of the wind farms through contracting in the form of a cPPA. 

Challenges:

Contracting cPPA in Poland requires dedication of extensive resources into search of optimal offtakers and negotiations. At the same  time broad market of the offtakers constituting both of international and local companies requires deep understanding of the polish offtaker sector as well as their needs. In consequence KGAL has reached  out to PwC who proposed unique value propositions and ownership for delivering the results of the project. In course of the project PwC tasks included: 

• Finding an energy-intensive customer interested in purchasing electricity from RES
• Negotiating satisfactory contract terms
• Accurately and quickly signing the contract
• Assisting in discussions regarding the solution to relevant shareholders (e.g. banks) 

Solution:

PwC as a leading advisor and has conducted route-to-market and prepared a long list of potential offtakers which was shortener after the consultation with client. Next stage of the project was negotiating with counterparties about key parameters of the termsheet, after the negotiation and choosing offtaker role PwC was support with preparing of final agreement. As a result of the project KGAL sign vPPA for 15 years and will sell approximately 230 GWh annually for the Lafarge.

Situation:

Hrvatski Telekom is a Croatian company with huge share in telcom industry in Croatian market. Entity want to Fixed long-term price and ensure regular delivery of energy which will cover a significant volume of consumption for energy from renewable sources which will be a guarantee of long-term financial electricity prices stability for Hrvatski Telecom.

Challenges:

• At the moment of project kick-off there were 0 known signed cPPA contracts is Croatia
• Due to early stage of market development crucial aspects of cPPA contract were challenging i.a. 1) Finding a satisfactory offer on developing market / what type of cPPA should be chosen 2) Contracting the physical electricity supply to match the cPPA terms in order to properly hedge pricing risks.

Solution:

PwC as a leading advisor and has conducted route-to-market and prepared a long list of potential generators. Next stage of the project was negotiating with counterparties about key parameters of offers after the negotiation and choosing final counterparty role PwC was support with preparing the most suitable final agreement. As a result of the project Hrvatski Telekom sign vPPA for 10 years and will purchase around 50 GWh electricity produced by wind powerplants in Croatia.

Situation:

Volkswagen Group Polska as a leader in polish automotive industry which is especially highly energy absorbing. The strategy of the group is to reduce the greenhouse gases emission and for this cause it needs to be developed a new strategy for purchasing electricity.

Challenges:

• Multiple shareholders involved in the project 
• Complications around regulatory environment throughout the project related to market interventions, price capping systems etc. 

Solution:

PwC as an advisor conduct an analysis of VWGP's current situation as well as the conditions of the Company's operations relevant from the perspective of the projected energy strategy and the needs defined by the Company in this respect needs in this regard. Next stage was developed a catalog ("long list") of recommended scenarios for the assumptions of the target energy strategy VWGP's energy strategy, with appropriate justification for each of the indicated scenarios. 

Situation:

Company has been under pressure to fulfill ambitious RES goals set by the global corporate structures. In order to fulfill those Orange Romania has decided to aim at signing the cPPA contract on the territory of Romania. 

At the start of the project no cPPA contracts were yet undersigned on this territory. 

Challenges:

The project has faced multiple challenges to overcome for both PwC and Orange Romania teams: 

• Changes in the regulatory environment especially related to price capping for renewable energy sources

• Early stage of RES projects in Romania with pressure on negotiating delayed COD terms

• Recent acquisition of separate large telecommunications company by Orange Group that required including the entity in the whole endavour

• Early stage of development of offering of physical purchase products on the Romanian market. 

   

Solution:

PwC as an advisor conducted end-to-end advisory support for Orange Romania: 

• Setting the energy strategy for the Group in Romania
• Establishing the parameters of potential cPPA contract
• Identification of potential suppliers and reaching out to those entities
• Negotiations of the termsheets 
• Negotiations of the contracts 

That have led to final undersigning of cPPA contract for Orange Romania.

Situation:

As a part of the energy strategy the Client decided to purchase green electricity via cPPA and  signed virtual cPPA

Challenges:

cPPA is treated as a financial instrument with all the associated obligations (under IAS and IFRS). One of these implications is volatility in the Profit and Loss statement which is undesirable in perspective of managing the business. This treatment has been identified by the Client as major threat to the potential undersigning of the cPPA contract. 

Solution:

PwC conducted feasibility study for the implementation of hedge accounting in the area of price risk in relation to the procurement of renewable energy via cPPA and help with implementation. Feasibility presented the reequipments under local and international accounting standards for implementing HA and shows potential risks associated with hedge accounting for entity.