Thanks to its history as a Swiss energy company that has been delivering electricity, natural gas, and energy-related services to users across Switzerland and Europe for many years, Axpo is no stranger to the concept of energy transition. On the surface, the idea behind this evolution is simple: It’s a combined effort to move from fossil-based systems of energy production and consumption toward renewable energy, thus having a significant positive impact on our fragile environment at the same time.
Having said that, the success of the energy transition will come down to more than just a collective acknowledgment of the importance of things like wind and solar power. It also requires industry leaders to invest in these renewable sources as attractive as possible. Especially given everything going on in the world over the last few years, investors are putting a premium on security first and foremost. This is also precisely what Axpo has been focusing on in recent memory through innovation in terms of long-term contracts and Power Purchase Agreements (PPAs) as well.
Axpo and the Energy Transition: An Overview
One primary example of the potential that PPAs bring with them takes the form of AlpinSolar, the largest alpine solar plant in all of Switzerland. Every year, AlpinSolar supplies 3.3 gigawatt hours of climate-friendly electricity. It’s important to note that more than half of this number comes during the particularly cold winter months of the year when demand for reliable heating is at a high.
Within the context of AlpinSolar, Axpo entered into a long-term contract with Swiss discounter Denner. Denner agreed to purchase the solar power coming out of AlpinSolar for a 20-year term at a fixed price. Not only does this guarantee security on behalf of the investors at Denner because they know that their rate won’t increase for a pre-determined period, but it also guarantees that renewable electricity will be used over the same term.
All told, Axpo is just one example of an organization that believes Power Purchase Agreements will be an invaluable weapon in the fight against climate change for years to come. They’ve become increasingly popular in Europe over the last few years because they’re far easier to manage than inherently complicated state subsidies, but they also make investments in renewable sources more attractive across the board by lowering the initial “buy-in.” It has been said that there are many renewable projects around the continent right now that simply would not exist without a PPA at the heart of them all.
From that point of view, PPAs are a major driving force behind the energy transition on a global scale. They help meet the needs of both energy producers and consumers simultaneously while doing so in a scalable way that allows the industry room for growth moving forward.
All this is especially important as the European Union Green Deal continues to move toward the ambitious targets that were set to be accomplished by 2030. Not only did that historic agreement aim for a 55% reduction in CO2 emissions by that time, but a 32% increase in the share of renewable energies as well. For this to happen, wind farms and solar systems with a capacity of at least 60 gigawatts each need to be built every year, a move that will require not just existing investors to expand their portfolios, but continued growth across the sector as well.
The team at Axpo believes that PPAs and long-term contracts are the way to do this, which is why they’ve become such a big part of the company’s own Ambition 2030 initiative as well.