On July 11, the Renewable Energy Institute published ``Enterprise PPA Contract Pricing: Components and Checkpoints'' explaining the check points for evaluating contract pricing for enterprise PPAs (power purchase agreements). Targeting three types of enterprise PPAs: on-site PPAs, off-site (physical) PPAs, and off-site virtual PPAs, there are three check points: generation costs, electricity prices, and environmental values, as well as standards. indicating contract pricing.
Image comparing the cost of off-site physical PPAs
(Source: Renewable Energy Institute)
Regarding power generation costs, the estimated power generation cost for 2024 (assuming 20 years of operation) is calculated at a total of 13 to 16 yen/kWh (excluding power generation imbalance costs and power generation surcharges). The analysis is as follows: the base case is 10 yen/kWh, additional costs are 1 to 4 yen/kWh (land acquisition/development, grid connection, etc.), and the operator's profit margin is 2 yen/kWh (including financing costs). The main fluctuating factors include equipment costs, construction costs, grid connection construction costs, and maintenance and management costs.
In addition, the total cost of electricity generation when installed on a roof is 12 yen/kWh in the case of a folding roof and 100% self-consumption. In the case of a flat roof, it is calculated as +3 yen/kWh (mounting frame, etc.), and in the case of 50% self-consumption, it is calculated as +5 yen/kWh (assuming the surplus is sold at 7 yen/kWh including environmental value). In addition, the cost of wind power generation during the operating period is higher than that of solar power, and it is susceptible to interest rate increases and inflation, so the cost of offshore wind power generation is estimated to be more than 20 yen/kWh in 2024.
Regarding electricity prices, the electricity prices of the former joint power companies ranged from 13.55 to 25.30 yen/kWh, and the average of the 10 companies was 20.83 yen/kWh (April 2024, high voltage, standard package). The main fluctuating factors include fuel cost adjustments, wholesale electricity market prices, capacity contribution reflection, and renewable energy surcharges.
For on-site PPAs and off-site physical PPAs, the contract price is the electricity price, but in the case of off-site virtual PPAs, the consumption cost is the difference between the contract price and the wholesale electricity market price, plus the electricity price. Assuming the market price is 12 yen, the difference from the contract price is about +1 to 4 yen/kWh. As a cost control measure, we apply a feed-in premium (FIP) to the power generation equipment, cover the difference in the PPA by purchasing the electricity we use on the market-linked menu, and cover the difference in the electricity price with the market-linked portion. There is a method of offsetting the difference in the virtual PPA with premium income.
The environmental value price is assumed to be 2 to 5 yen/kWh in 2030 to 2035. The main factors of fluctuation include supply and demand, replenishment, and system changes. Another problem with fossil-free certificates is that trading in the market is limited to four auctions a year, the minimum and maximum prices are set by the government, and there is no price difference based on different electricity generation methods, so the degree of freedom in trading becomes low. In the future, the system is expected to be changed so that transactions can be made at free prices based on differences in electricity generation methods, etc., and it is expected that transactions will start under the new system in fiscal 2026, and the price of the number of high environmental value certificates will increase.
The standard contract price for 2024 is 12 to 18 yen/kWh for on-site PPA, which varies depending on the roof shape and self-consumption rate. Off-site physical PPA is 13 to 16 yen/kWh + generation imbalance cost + generation surcharge + amount reflecting capacity contribution, and the total generation imbalance cost and generation surcharge is about 2 yen/kWh, the amount reflecting capacity contribution. The fee is about 2 to 3 yen/kWh (some businesses may not collect it). Virtual PPA is 13 to 16 yen/kWh + generation imbalance cost + generation surcharge and the amount reflecting capacity contribution can be added to the purchased electricity.
When consumers evaluate the total cost of a corporate PPA, they compare not only the conventional electricity price but also the environmental value (CO2 emission cost). As a criterion for evaluation, it is necessary to consider the fact that corporate PPAs enable the long-term use of additional renewable energy. In addition, the introduction of this system is expected to have impacts such as reducing costs due to reduced CO2 emissions, strengthening customer relationships through decarbonized business operations, attracting new customers, enhancing corporate value and preventing long-term cost increases due to inflation.
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