Latest news with #ContractforDifference
Mint
11-06-2025
- Business
- Mint
Meta, Amazon, and Microsoft buy green power under a special contract. That's causing losses
New Delhi: In a rare occurrence, India's falling real-time renewable energy tariffs are causing losses to Big Tech firms. The reason: a mechanism aimed at ensuring price stability and managing risks. Meta, Amazon and Microsoft are incurring losses on their green energy power purchase agreements (PPAs) that are based on Contract for Difference (CfD), said four people aware of the development. Power producers and buyers agree to pricing under long-term pacts. When such agreements are based on CfD, either party has to pay the difference between the contracted and the actual price to the other. In case the market prices are higher than the agreed-upon 'strike price', the power producer pays the differential to the procurer–in this case, corporates. But if the market price is lower than the contracted price, the company needs to pay the developer. With the prices falling below ₹1 per unit last month, the tech firms that signed CfD-based long-term PPAs are witnessing an average loss of around ₹1 per unit. Read more: NTPC ties up with SEforALL for energy transition roadmap Corporations and generators enter into CfD-based PPAs for risk management and assured prices. These contracts are important for large corporations to earn carbon credits to meet their green targets. 'The CfD contracts are under stress given the renewable energy prices trajectory," said one of the four people cited above, requesting anonymity. 'The price touched record lows last month and the recent trend is a rare development. The losses to corporates tied up in CfD-based PPAs would also be unprecedented, although unquantifiable as these PPAs are mostly private," said an executive with an energy exchange cited above who also did not want to be named. 'There are not many corporates in the country who have tied up such PPAs. The major players include the global tech giants." Queries emailed to Amazon, Meta, and Microsoft remained unanswered till press time. "Procuring entities would have been incurring losses in the past two months owing to the fall in market prices of power. Currently, the market-clearing price stands around ₹2.1-2.2 per unit during the solar hours," said Jatin Arya, director at CareEdge Ratings. 'This downtrend has been seen for two months in a row. However, in case prices rebound, these entities may be able to offset such losses over the course of the remaining months of the fiscal." Power prices drop in cooler May The decline in real-time prices comes as demand for power in India's top six industrialized states flattened in April and cooled in May, as reported by Mint earlier. This suggests a potential fall in factory production at the start of the new financial year. The average market-clearing price (MCP) on the Indian Energy Exchange during solar hours (11:00-16:00 hours) in May was ₹2.2 per unit against ₹3.5 a unit a year earlier, with prices in some time blocks at nearly ₹0 per unit. The average MCP during non-solar hours (00:00-11:00 hours and 16:00-24:00 hours) was ₹3.8/unit vs ₹5.2/unit in the corresponding period of the previous year. The Central Electricity Authority (CEA) has projected a peak demand of 270 gigawatt (GW) this year, compared to a record 250 GW recorded on 30 May last year. But May was cooler this year compared with a year earlier, when the peak demand had touched 250 GW. The fall in temperatures drove prices down in the short-term power market. Average market-clearing price (MCP) in the real-time market declined 28% on-year to ₹3.43 per unit in May 2025, indicating ample availability amid tepid electricity volume requirement, said a Crisil report. Green commitments AEI New Energy Trading Pvt. Ltd, a subsidiary of Amazon Inc has a 20-year PPA at ₹2.72 per unit from 100 MW (AC)/135 MW (DC) solar power project in Rajasthan. Last August, Microsoft signed a PPA for 437.6 MW of green attributes, marking one of the largest corporate renewable deals in the country. Under this agreement, Microsoft aims to advance its renewable energy targets, while supporting community initiatives such as rural electrification and women's economic empowerment. Given the requirement of green attributes for achieving green energy targets, 30% of green energy usage cited by large corporations comprises green attributes sourced through international renewable energy certificates, CfD-based PPAs and virtual PPAs, said Aditya Malpani, senior director and regional business head – west, AMPIN Energy Transition. Temporary blip Industry players do not expect real-time renewable energy prices to remain low for long. 'The instance of prices reaching below ₹1 last month was a rare and is unlikely to sustain over the long term. It's important for industry to come up with a mutually winning contractual structure," said Malpani of AMPIN Energy Transition. "One provision could be the introduction of 'cap and collar'; in other words, lower and upper limits in case of upswings and downswings. Further, merchant projects can offload physical electricity to bulk off-takers under short-term contracts as breakeven prices in third-party sale are still much higher than market-clearing prices in exchanges. Lastly, electricity derivatives being launched in a short while shall provide another hedging mechanism for CfD contracts," Malpani said, adding that since price volatility is a reason why corporates remain cautious of getting into CfD-based PPAs. Read more: Crisis alert: Careless water management poses India an existential threat According to Suddhasatta Kundu, director-power sector advisory at Nangia & Co LLP, the decrease in solar price is attributed to various reasons, including low financing cost, higher generation during the day when demand is low, favourable regulatory provisions, among others. 'In the short term, there may be a reduction in solar price; however, in the long term, CfDs will be a favourable risk-mitigation instrument for the buyer. Green attributes requirement would certainly drive, but it will not solely be the driving factor," he said. Rahul Mishra, senior VP & head-C&I, BluPine Energy, said: 'While such price movements have prompted discussion around Contract for Difference (CfD)-based agreements, these are largely situational developments rather than indicators of a systemic challenge." Noting that for commercial and industrial (C&I) customers, renewable energy procurement remains a long-term strategic choice aimed at energy cost stability, decarbonization goals, and sustainability commitments, he said that CfD structures are designed to balance short-term fluctuations with long-term value, and temporary price dips hardly undermine the fundamental economic or environmental rationale of these contracts. These developments point to surplus renewable availability during certain periods, which reinforces the importance of storage solutions, transmission and evacuation efficiencies, demand-side flexibility, and innovative contracting models in the future, Mishra said. Read more: Energy security: India needn't be staring at a $1 trillion import bill
Korea Herald
10-06-2025
- Business
- Korea Herald
Driving Clean Energy Forward: SANY R.E. Marks Milestone in Europe with Serbia's Alibunar Wind Power Project
BEIJING, June 10, 2025 /PRNewswire/ -- As the global spotlight turns once again to the urgency of climate action, SANY Renewable Energy is making that commitment tangible, not just in words, but in megawatts. Recently, SANY R.E. signed a Power Purchase Agreement (PPA) and Contract for Difference (CfD) with Serbia's Alibunar Project. More than just a new market entry, the project reflects SANY R.E.'s resolve to drive clean energy solutions where they're needed most. The Alibunar project is situated in eastern Serbia, which is one of the country's richest areas for wind resources. Expected to achieve commercial operation in 2028, the project has an operation period of 25 years. With a total installed capacity of 168MW, the project can produce electricity of about 480 million kWh annually after completion. When grid-connected, it will offer Serbia a large amount of clean energy, which will help optimize the local energy structure and reduce the reliance on traditional fossil energy. The Alibunar project is SANY R.E.'s first investment in Serbia and a milestone in its global clean energy layout. Zhou Fugui, Chairman of SANY R.E., said: "The Alibunar wind project is of great importance to us, marking our entry into the wider European market. We will actively co-operate with local partners and introduce advanced wind power technologies and solutions to help Serbia realize its energy transition and sustainable development goals." As a leading global provider of wind power solutions, SANY R.E. has been committed to providing efficient and reliable wind power equipment and support. In the process of the project, SANY R.E. will leverage its technical advantages to ensure the efficient advancement and stable operation of the project. Meanwhile, the company's local professional operation and maintenance team will provide comprehensive support for the project. SANY R.E. has made climate action central to its sustainability strategy, supporting the Paris Agreement goal of limiting global warming to 1.5°C. In 2024, its wind turbines generated 135.8 billion kWh of electricity, cutting CO₂ emissions by 72.87 million tons — equal to planting 3.3 billion trees. The company also advances eco-friendly turbine design, aiming to raise the recyclability of mainstream models to 95% by 2030, based on 2020 levels. Looking ahead, SANY R.E. will continue to contribute to the global energy transition by providing high-quality wind power solutions to more countries and regions, collaborating to create a cleaner energy future.
Cision Canada
10-06-2025
- Business
- Cision Canada
Driving Clean Energy Forward: SANY R.E. Marks Milestone in Europe with Serbia's Alibunar Wind Power Project
BEIJING, June 10, 2025 /CNW/ -- As the global spotlight turns once again to the urgency of climate action, SANY Renewable Energy is making that commitment tangible, not just in words, but in megawatts. Recently, SANY R.E. signed a Power Purchase Agreement (PPA) and Contract for Difference (CfD) with Serbia's Alibunar Project. More than just a new market entry, the project reflects SANY R.E.'s resolve to drive clean energy solutions where they're needed most. The Alibunar project is situated in eastern Serbia, which is one of the country's richest areas for wind resources. Expected to achieve commercial operation in 2028, the project has an operation period of 25 years. With a total installed capacity of 168MW, the project can produce electricity of about 480 million kWh annually after completion. When grid-connected, it will offer Serbia a large amount of clean energy, which will help optimize the local energy structure and reduce the reliance on traditional fossil energy. The Alibunar project is SANY R.E.'s first investment in Serbia and a milestone in its global clean energy layout. Zhou Fugui, Chairman of SANY R.E., said: "The Alibunar wind project is of great importance to us, marking our entry into the wider European market. We will actively co-operate with local partners and introduce advanced wind power technologies and solutions to help Serbia realize its energy transition and sustainable development goals." As a leading global provider of wind power solutions, SANY R.E. has been committed to providing efficient and reliable wind power equipment and support. In the process of the project, SANY R.E. will leverage its technical advantages to ensure the efficient advancement and stable operation of the project. Meanwhile, the company's local professional operation and maintenance team will provide comprehensive support for the project. SANY R.E. has made climate action central to its sustainability strategy, supporting the Paris Agreement goal of limiting global warming to 1.5°C. In 2024, its wind turbines generated 135.8 billion kWh of electricity, cutting CO₂ emissions by 72.87 million tons — equal to planting 3.3 billion trees. The company also advances eco-friendly turbine design, aiming to raise the recyclability of mainstream models to 95% by 2030, based on 2020 levels. Looking ahead, SANY R.E. will continue to contribute to the global energy transition by providing high-quality wind power solutions to more countries and regions, collaborating to create a cleaner energy future.
Morocco World
29-05-2025
- Business
- Morocco World
Xlinks Pauses UK-Morocco Undersea Power Cable Project Amid Regulatory Delays
Doha – Xlinks, the British company behind the ambitious project to connect Morocco and the United Kingdom via undersea power cables, has temporarily paused its Development Consent Order (DCO) examination process. In a May 14 letter to the UK Planning Inspectorate, the company requested this halt while awaiting a crucial decision on its Contract for Difference (CfD) from the UK Department of Energy Security and Net Zero. The pause comes as the company seeks financial certainty through a CfD that would guarantee fixed electricity prices for 25 years. According to company sources close to the matter, this is 'a pause in the DCO process, not a suspension,' aimed at preventing 'misalignment of different project development stages.' The main issue holding up the project is the need for price certainty. Xlinks is seeking a guaranteed price of £77 per megawatt-hour for solar energy and £87 for wind energy produced in Morocco's Guelmim-Oued Noun region. Without this financial commitment, investors are reluctant to move forward with the necessary funding. 'Without this clear commitment on a stable price, Xlinks' financial partners are hesitant to inject the necessary investments,' the company stated. Dave Lewis, Xlinks' chairman, has expressed frustration over the delays and frequent ministerial changes in the UK's energy department. In a January interview with Bloomberg, Lewis noted that the undersea cable project could generate up to £24 billion (MAD 300 billion) in investments, with approximately £5 billion in Great Britain alone. The project was designated as a 'nationally significant infrastructure project' by the British government in 2023, highlighting its strategic importance to the UK's energy security. It aims to provide power to nine million British households and reduce CO2 emissions from the UK energy sector by 10%. Read also: Former UK Minister: Morocco Key Player in Britain's Clean Energy Mission The proposed 3,900-kilometer cable would traverse Portuguese, Spanish, and French coastal waters to connect Morocco's renewable energy facilities with the British grid. If completed, it would deliver 3.6 gigawatts of electricity generated from solar parks, wind farms, and battery storage systems. Facing continued delays, Xlinks has begun exploring alternatives. Lewis told The Telegraph in early April that if the British government's response was further delayed, shareholders might redirect resources toward other projects under development, including a potential Morocco-Germany connection. The company opted for direct negotiations with the government rather than going through a tender process, which has contributed to the delays. Political instability in the UK has further complicated negotiations. Meanwhile, competition is emerging. Australian group Fortescue is developing a similar 100-gigawatt electrical connection project between North Africa and the European Union. Fortescue's chairman, Andrew Forrest, has confirmed discussions with Ed Miliband, the British Secretary of State for Energy Security, and various European governments about installing multiple undersea cables that could transport up to 500 terawatt-hours (TWh) of electricity annually—nearly equivalent to Germany's total annual consumption. Even with the most favorable outcome, Xlinks' complex authorization process is unlikely to conclude before 2026. While the company targets a 2030 launch date, effective service might not begin until 2031 at the earliest—a timeline that has investors increasingly concerned. The project has already received authorization from the Moroccan side, but still requires approvals from France, Spain, and Portugal, which the cables would cross. Tags: UK MoroccoXlinks project
Ya Biladi
29-05-2025
- Business
- Ya Biladi
Xlinks requests pause in UK permit process as it awaits pricing decision for Morocco–UK project
Xlinks, the company behind the 4,000 km subsea cable to deliver solar and wind-generated electricity from Morocco to the UK, has paused its application for a Development Consent Order (DCO)—a legal authorization required for large infrastructure projects in the UK. Xlinks formally requested the pause in a letter to the UK Planning Inspectorate on May 14, explaining that it wants to wait for the outcome of its Contract for Difference (CfD) bid before proceeding. The CfD is a pricing mechanism that allows renewable energy developers to lock in a fixed price for their electricity over a set period, ensuring financial stability for large-scale projects. Xlinks expects a decision in late spring and is seeking a price of £70–80 per megawatt-hour (MWh), lower than comparable projects. Aligning project stages The Planning Inspectorate's answer was swift, granting Xlinks said pause on May 15. Sources close to the project told Yabiladi that the pause is not a suspension or cancellation, but a strategic move to align project stages. «The purpose of the pause is to allow the review process to proceed as efficiently and rigorously as possible, while ensuring that the DCO can then progress rapidly», they explained. It is worth noting that the Morocco–UK Power Project aims to deliver 3.6 gigawatts (GW) of dispatchable, clean energy from solar, wind, and battery facilities in Morocco to the UK. The project, which could cost up to £24 billion, is expected to cut UK carbon emissions by 10% and reduce wholesale electricity prices by 9.3%. In 2022, the project was included in the UK's strategic energy vision and recognized as a project of national significance in 2023. For the record, Xlinks has expressed frustration over delays in receiving UK government backing for the project, warning it could move the initiative to another country. Speaking to local media in March, Sir Dave Lewis, chairman of Xlinks, said that the delays in securing government approval are undermining investor confidence.
