Norwegian power firm Statkraft has secured a power-purchase agreement with Mercedes' parent company Daimler, covering all the firm’s electricity demand in its native Germany.

The deal is a 100 percent renewable power-purchase agreement that will match supply with Daimler’s demand in real time. That means taking advantage of Statkraft’s vast hydropower capacity to fill in any lulls in solar and wind availability.

Details of pricing and even the total scale of the PPA have not been revealed. Statkraft won’t go any further than to reiterate to GTM that the deal is on an “industrial scale.”

In addition to older wind farms qualified under Germany's EEG renewables support program, new-build subsidy-free solar projects will be developed to feed Daimler locations across Germany. Daimler’s current electricity supplier Enovos will take the lead on managing, balancing and billing the new arrangement.

As with a previous 46-megawatt wind PPA arranged between the trio, the deal includes power from wind farms set to lose their steady EEG feed-in tariff payments at the end of this year. Around 4 gigawatts of operational onshore wind in Germany will be impacted starting January 1, 2021.

Peter Osbaldstone, research director for Europe at Wood Mackenzie Power & Renewables, said the deal is evidence of the German renewables sector’s maturity. As the earliest generations of projects lose their FIT training wheels, new routes to market will need to be found —  and at gigawatt scale.

“These projects have been benefiting from fixed remuneration for the past 20 years, so for many, the wholesale market is going to look like a pretty scary place,” Osbaldstone told GTM.

“PPAs such as this one provide another route for generators, providing a secure revenue stream to support continuing operations. The flexibility of Statkraft's hydro generators adds a further facet to this deal — renewable power generated when the offtaker requires it — and represents a new option in the range of offerings available to industrial offtakers,” he added.

Hydropower is clearly essential to the structure of the deal; not every power provider is going to be able to match the offer, highlighting the benefit of flexibility in renewables-rich markets.

Google recently signed a groundbreaking corporate PPA in the state of Nevada that covers both large-scale solar and storage capacity, allowing the tech giant to begin moving toward its real-time power needs with renewables.

"To generate green electricity exactly when it is needed is a major challenge that can only be met with considerable flexibility in generation," Statkraft CEO Christian Rynning-Tønnesen said in a press statement. "Our flexible hydropower plants complement the fluctuating power generation from wind and solar so that a 100 percent renewable power supply is guaranteed at all times."

Within Europe, Norway, Turkey, France, Italy and Spain have the most installed hydroelectric capacity, all topping 20 gigawatts. Norway is the leader with more than 32 gigawatts.

Rynning-Tønnesen characterized the size of the deal as “unique” in Germany, while Enovos Germany’s managing director Anke Langner said the deal sends a message about the trajectory of the green power market.

Europe lags the U.S. in embracing corporate PPAs, and Germany is a laggard in Europe. Its slow takeup has been attributed to prohibitive financing costs that have made profitability hard to achieve.

According to trade body WindEurope, 1.6 gigawatts of corporate PPAs were signed in Europe in 2019. Google procured the same figure in one go in September 2019.

Aurora Research estimated that €2 billion ($2.2 billion) of annual investment is up for grabs in Germany alone if the corporate renewables opportunity is seized. As more EEG payments phase out, corporate PPAs may become increasingly attractive.