State guarantees for PPA with electrointensive consumers

The guarantees by the State to facilitate PPA for electro?intensive consumers at competitive prices with renewable energy projects are already available. CESCE, the managing agent of these guarantees, offers insurance both to the financial entities that issue guarantees for electro?intensive consumers and to the sellers of the energy in the PPA.

aleasoft - electrointensive industry

In the Spanish version of the webinar of February organised by AleaSoft Energy Forecasting as part of its series of monthly webinars on current affairs and topics of interest of the energy sector in Europe, Juan Puyol, Deputy Director at CESCE (Spanish Export Credit Insurance Company), explained the coverage that the company offers on behalf of the State for PPA contracts with electro?intensive consumers. The webinar in Spanish also included the participation of Fernando Soto, Director?General of AEGE (Association of Companies with Large Energy Consumption), who analysed the situation of electro?intensive consumers in Spain and announced the holding of an auction of renewable energy PPA with electro?intensive consumers. Customers and those interested in the forecasts of AleaSoft Energy Forecasting can request the recording of the webinar at this link.

CESCE and the coverage on behalf of the State of PPA with electro?intensive consumers

CESCE is a public company, majority owned by the State, which offers credit risk insurance and also guarantees on behalf of the State. Royal Decree?law 24/2020 assigns it the role of managing agent of the risk coverage on behalf of the State in the mid- and long?term electricity contracting by electro?intensive consumers.

The Royal Decree?law also established the FERGEI, the Spanish Reserve Fund for Electro?intensive Entities Guarantees, and endowed it with 200 million Euros, but being able to cover, during the first three years, a maximum amount of operations for the issuance of coverage or guarantees of 600 million Euros by the State.

Juan Puyol detailed the conditions that consumers should meet in order to qualify for coverage. First of all, the consumer should be certified as electro?intensive by the Ministry of Industry. Second, the electricity purchase agreement should have a minimum duration of five years and a maximum of twenty years. And, finally, the seller should deliver energy from renewable sources.

Coverage modalities

During the webinar, Juan Puyol listed the two types of coverage they offer for PPA of electro?intensive consumers on behalf of the State. The first modality is coverage on bank guarantees. This modality covers financial entities that issue a guarantee derived from the signing of a PPA. If the guarantee was executed and the electro?intensive buyer could not pay it, CESCE could cover up to 80% of the value of the guarantee. In this case, the insured is the financial institution issuing the guarantee.

The second modality is a guarantee for the energy seller that covers the risk of non?payment by the electro?intensive consumer. In this case, the insured is the seller and, in the event of non?payment by the electro?intensive buyer of their obligations under the PPA, CESCE could indemnify up to 80% of the contract termination value to the seller. In this modality, CESCE could even substitute the position of buyer in the PPA and the counterparty of the contract would become CESCE.

To questions from the webinar audience, Juan Puyol clarified that all these conditions and modalities of coverage are possible for both physical and financial PPA.

AleaSoft Energy Forecasting’s analysis on the prospects for energy markets in Europe and the renewable energy projects financing

The registration for the next edition of the AleaSoft Energy Forecasting’s monthly webinar is already open. The webinar of March will take place on the 17th and will feature the presence of speakers and participants in the analysis table from EY, to deal with current issues of the energy sector in Europe such as the regulatory novelties in Spain, the renewable energy projects financing, the PPA, the self?consumption and the portfolio valuation.