More and more large companies expect their suppliers to demonstrate that they are reducing CO2 emissions. PPAs are helpful in building the green supply chain.
The PPAs will play an important role in building a sustainable supply chain. For companies that want to gain funding or gain international contractors, the advantage of “green” in the production and logistics process is often a requirement to meet.
The interest in the PPAs in the context of building a sustainable supply chain will grow for two reasons:
- Energy price stabilization - the PPAs allow long-term contacts for energy supply from RES at a fixed, pre-known price. This is important, because companies immediately know one of the most important cost factors and do not have to fear price fluctuations.
- Implementation of the Corporate Sustainability Reporting Directive (CSRD) - as of January 1, 2024. The largest obligation listed on the company stock exchange to report ESG. In the following years, these requirements will include further entities. For companies, this means the need to indicate the source of energy they use and to demonstrate that it actually comes from RES.
ESG reporting will not only concern the activities of the company itself. It will have to show to what extent the company has ensured that its entire supply chain is sustainable. This directly translates into an increase in energy demand from RES.
Big companies are already playing green...
The largest companies are already introducing their own programmes to minimise negative impacts on the environment. This is related to the implementation of the so-called European Green Deal adopted in 2021. Its aim is to achieve climate neutrality by 2050 by the European Union. The aim is to combat rapid climate change. It is obvious that this will not succeed without strong business commitment.
This path is followed, among other things, by the large building materials manufacturer Lafarge. In April 2023 the cement giant signed the PPAs, making sure that 50 percent of the electricity consumed by this company would be truly green - from wind farms. This is an important message for customers of this company using its products. Thanks to this move, they - using Lafarge materials - lower their carbon footprint. Without a doubt, information about such a supplier of construction materials will be found in the ESG reports of the company's customers.
...and expect it from their suppliers
another example of companies that have adopted the objective of achieving climate neutrality in all their production plants by the end of 2022 is the Mercedes-Benz company. In addition, one of the elements of this objective is to require its own suppliers to supply certificates of origin for energy, confirming that the electricity they use for production comes from RES. These certificates must be issued by reliable certification agencies such as TÜV SÜD or DNV GL and must be up-to-date and authentic.
Another large player who requires his business partners to meet sustainability requirements, including having green certificates, is the IKEA Group. IKEA standard IWAY promotes basic standards on labour rights and environmental protection among suppliers.
Many entrepreneurs point out that green electricity is becoming increasingly important throughout the supply chain. Signing a contract for delivery directly from RES is now not only an action for the climate and environment, but also a way to develop business and attract new customers.
Race for Green Energy
The solution, which lies within the reach of major Polish companies, are the PPAs, which guarantee that the power supply of the plant comes from RES. Green energy may not be enough for all companies operating in Poland. Why?
In Poland we now use about 175 TWh. According to CUS data, about 31.6 TWh are allocated to households. The rest are companies, institutions, local governments. The annual demand of Polish companies for electricity is about 60 TWh. Available RES power after the installation has been built, the connection conditions will provide about 50 TWh of energy if built. Today this value is about 20 TWh.
In February this year, global companies operating in Poland called on the authorities to further liberalise the Windmill Act: "Our companies prioritise investment in those markets where green electricity is readily available" - said representatives of giants like Amazon, Google, Ikea or Mercedes. "Without the participation of green energy, the Polish economy is threatened with loss of competitiveness and market attractiveness" - They warned me. This is another important signal about the role of green energy in the development of companies.
The PPAs can be concluded now and start to benefit in subsequent years
However, the race for green energy can still be won. On the OZEOS platform there are offers that will allow to contract energy from windmills, sun or water for future years. It is worth noting that with the use of solutions available on the RES platform, the best selection of RES mix can bring up to 75-80 percent of the customer's demand in green energy.
Thanks to its functionalities, RES helps to reduce the operating costs of factories, service companies, other companies using more than 1000 MWh per year. The algorithms used allow the conclusion of long-term PPA contracts which guarantee the energy volume to consumers and stable price to manufacturers. OZEOS also helps to conclude a contract for the RES source, through which the manufacturer will be able to obtain funding from the bank for the construction of the RES installation.