IDEAS home Printed from https://ideas.repec.org/a/gam/jeners/v15y2022i18p6691-d913525.html
   My bibliography  Save this article

The Significance of the “Power Purchase Agreement” for the Development of Local Energy Markets in the Theoretical Perspective of Polish Legal Conditions

Author

Listed:
  • Szymon Słotwiński

    (Faculty of Law and Administration, University of Szczecin, 71-101 Szczecin, Poland)

Abstract

Today’s geopolitical and economic situation (negative economic effects of COVID-19; war in Ukraine) adversely affects the energy market situation. These circumstances make it necessary to quickly adapt the previously adopted long-term strategies for transforming the energy market to maximise the country’s energy security through greater diversification and energy self-reliance. The legal systems of the Member States, including Poland, provide for various instruments to support the production of electricity from renewable sources. However, each Member State has a different potential for producing energy from renewable sources (later as RES), so the measures used to promote the use of energy from renewable sources in the broad sense are tailored to achieve the desired level of renewable energy production, particularly under EU law. For this reason, a variety of support models are used in the Member States, which are subdivided into direct (e.g., feed-in tariffs) and indirect (e.g., tax credits). However, state support schemes for renewable energy production do not always allow producers to have stable, long-term revenues and sources of additional income that guarantee the possibility to raise external financing for RES projects. However, irrespective of the support measures used in individual countries, European electricity markets (following the American system) have created a non-public instrument—the power purchase agreement (later PPA or PPAs). In 2021 alone, Europe saw record volumes of renewable energy contracted under PPAs—6.9 GWh. Despite the importance of PPAs for the development of renewable energy (most evident in the Danish, Finnish, British and Norwegian markets), Polish legal acts do not apply this contractual construct. Although Polish law creates the possibility for energy market participants to establish PPAs, these agreements will not be a key instrument for the development of renewable energy at the local level, as they are not a sufficient alternative to the current public forms that support renewable energy generation in Poland. This analysis proves that the existing status of regulations in Poland means that PPAs have limited significance and are rather dedicated to entities that will be able to face up to administrative, legal and technological barriers as an addition to the public support system. The analyses conducted are theoretical in nature. The research is based on the dogmatic approach (the analysis of the law in force) applied in the science of law, which is part of the social sciences.

Suggested Citation

  • Szymon Słotwiński, 2022. "The Significance of the “Power Purchase Agreement” for the Development of Local Energy Markets in the Theoretical Perspective of Polish Legal Conditions," Energies, MDPI, vol. 15(18), pages 1-14, September.
    • Handle: RePEc:gam:jeners:v:15:y:2022:i:18:p:6691-:d:913525
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1996-1073/15/18/6691/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1996-1073/15/18/6691/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gabrielli, Paolo & Aboutalebi, Reyhaneh & Sansavini, Giovanni, 2022. "Mitigating financial risk of corporate power purchase agreements via portfolio optimization," Energy Economics, Elsevier, vol. 109(C).
    2. Bruck, Maira & Sandborn, Peter & Goudarzi, Navid, 2018. "A Levelized Cost of Energy (LCOE) model for wind farms that include Power Purchase Agreements (PPAs)," Renewable Energy, Elsevier, vol. 122(C), pages 131-139.
    3. Chaiken, Benjamin & Duggan, Joseph E. & Sioshansi, Ramteen, 2021. "Paid to produce absolutely nothing? A Nash-Cournot analysis of a proposed power purchase agreement," Energy Policy, Elsevier, vol. 156(C).
    4. Tranberg, Bo & Hansen, Rasmus Thrane & Catania, Leopoldo, 2020. "Managing volumetric risk of long-term power purchase agreements," Energy Economics, Elsevier, vol. 85(C).
    5. Mendicino, Luca & Menniti, Daniele & Pinnarelli, Anna & Sorrentino, Nicola, 2019. "Corporate power purchase agreement: Formulation of the related levelized cost of energy and its application to a real life case study," Applied Energy, Elsevier, vol. 253(C), pages 1-1.
    6. Bruck, Maira & Sandborn, Peter, 2021. "Pricing bundled renewable energy credits using a modified LCOE for power purchase agreements," Renewable Energy, Elsevier, vol. 170(C), pages 224-235.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gabrielli, Paolo & Aboutalebi, Reyhaneh & Sansavini, Giovanni, 2022. "Mitigating financial risk of corporate power purchase agreements via portfolio optimization," Energy Economics, Elsevier, vol. 109(C).
    2. Yang, Ju-Ying & Dodge, Jennifer, 2024. "Local energy transitions as process: How contract management problems stymie a city's sustainable transition to renewable energy," Energy Policy, Elsevier, vol. 184(C).
    3. Martin Bichler & Hans Ulrich Buhl & Johannes Knörr & Felipe Maldonado & Paul Schott & Stefan Waldherr & Martin Weibelzahl, 2022. "Electricity Markets in a Time of Change: A Call to Arms for Business Research," Schmalenbach Journal of Business Research, Springer, vol. 74(1), pages 77-102, March.
    4. Jose Barroco & Peerapat Vithayasrichareon, 2023. "Accelerating the Energy Transition through Power Purchase Agreement Design: A Philippines Off-Grid Case Study," Energies, MDPI, vol. 16(18), pages 1-26, September.
    5. Kandpal, Bakul & Backe, Stian & Crespo del Granado, Pedro, 2024. "Power purchase agreements for plus energy neighbourhoods: Financial risk mitigation through predictive modelling and bargaining theory," Applied Energy, Elsevier, vol. 358(C).
    6. Marios Stanitsas & Konstantinos Kirytopoulos, 2023. "Sustainable Energy Strategies for Power Purchase Agreements (PPAs)," Sustainability, MDPI, vol. 15(8), pages 1-19, April.
    7. Yang, Haolin & Xu, Siqi & Gao, Weijun & Wang, Yafei & Li, You & Wei, Xindong, 2024. "Mitigating long-term financial risk for large customers via a hybrid procurement strategy considering power purchase agreements," Energy, Elsevier, vol. 295(C).
    8. Isaac Amoussou & Emmanuel Tanyi & Ahmed Ali & Takele Ferede Agajie & Baseem Khan & Julien Brito Ballester & Wirnkar Basil Nsanyuy, 2023. "Optimal Modeling and Feasibility Analysis of Grid-Interfaced Solar PV/Wind/Pumped Hydro Energy Storage Based Hybrid System," Sustainability, MDPI, vol. 15(2), pages 1-30, January.
    9. Fang, Xichen & Guo, Hongye & Zhang, Da & Chen, Qixin, 2021. "Cost recovery and investment barriers for renewables under market manipulation of thermal collusion," Applied Energy, Elsevier, vol. 285(C).
    10. Heidari, Mohammad Reza & Heravi, Gholamreza, 2024. "Development of flexible supportive policy with real options for renewable energy projects: Case of photovoltaic systems," Renewable Energy, Elsevier, vol. 225(C).
    11. Tantau Adrian & Niculescu Elena, 2022. "The role of Power Purchase Agreements for the promotion of green energy and the transition to a zero carbon economy," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 16(1), pages 1237-1245, August.
    12. Ray, Manojit & Chakraborty, Basab, 2022. "Impact of demand flexibility and tiered resilience on solar photovoltaic adoption in humanitarian settlements," Renewable Energy, Elsevier, vol. 193(C), pages 895-912.
    13. Talaat, M. & Farahat, M.A. & Elkholy, M.H., 2019. "Renewable power integration: Experimental and simulation study to investigate the ability of integrating wave, solar and wind energies," Energy, Elsevier, vol. 170(C), pages 668-682.
    14. Xie, Li & Kong, Chun, 2023. "The social welfare effect of electricity user connection price policy reform," Applied Energy, Elsevier, vol. 346(C).
    15. Matteo Fermeglia & Paolo Bevilacqua & Claudia Cafaro & Paolo Ceci & Antonio Fardelli, 2020. "Legal Pathways to Coal Phase-Out in Italy in 2025," Energies, MDPI, vol. 13(21), pages 1-22, October.
    16. Joanna Wyrobek & Łukasz Popławski & Maria Dzikuć, 2021. "Analysis of Financial Problems of Wind Farms in Poland," Energies, MDPI, vol. 14(5), pages 1-28, February.
    17. Winikoff, Justin B. & Maguire, Karen, 2024. "The Role of Commercial Energy Payments in Agricultural Producer Income," Economic Information Bulletin 342468, United States Department of Agriculture, Economic Research Service.
    18. Barbón, A. & Fernández-Rubiera, J.A. & Martínez-Valledor, L. & Pérez-Fernández, A. & Bayón, L., 2021. "Design and construction of a solar tracking system for small-scale linear Fresnel reflector with three movements," Applied Energy, Elsevier, vol. 285(C).
    19. Luca Mendicino & Daniele Menniti & Anna Pinnarelli & Nicola Sorrentino & Pasquale Vizza & Claudio Alberti & Francesco Dura, 2021. "DSO Flexibility Market Framework for Renewable Energy Community of Nanogrids," Energies, MDPI, vol. 14(12), pages 1-19, June.
    20. Ismail Kamdar & Shahid Ali & Juntakan Taweekun & Hafiz Muhammad Ali, 2021. "Wind Farm Site Selection Using WAsP Tool for Application in the Tropical Region," Sustainability, MDPI, vol. 13(24), pages 1-25, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jeners:v:15:y:2022:i:18:p:6691-:d:913525. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.