FRANKFURT, July 26 (Reuters) - Swiss utility Axpo said on Friday said it had signed a deal to market power generated at a solar park in southern Germany under a power purchase agreement (PPA), meaning the facility will be developed using funds from advance sales of its output.
PPAs are closely watched by wholesale markets as important guides for the future pricing of green energy.
Big power users in industry and the public sector are increasingly seeking such deals to prove to customers and authorities that they are shifting to carbon-free energy.
"It is one of the first long-term PPAs in Germany's solar market," said a spokesman for Axpo.
"We aim to expand this kind of business."
The Axpo Deutschland subsidiary agreed the sale of 100% of output from the 1.5 megawatt (MW) plant for five years.
The solar park can supply 450 four-people households.
It was built by investors SEAC Holding with project developer and services company MaxSolar on the strength of the PPA, Axpo said. Effectively, a PPA acts as an insurance policy for the operator against falling power prices.
There are few known German PPA projects, and cost and prices details are not disclosed for competitive reasons.
MaxSolar said on its website that the plant started test operations in July. It would produce competitively and thus rise to the challenge of the free market, it said.
PPAs have a longer and wider traction in the United States, southern Europe and the Nordic countries.
But interest in Germany in PPAs has been building in the last few years, ahead of the large-scale expiry of 20-year fixed subsidy wind and solar projects from the middle of the 2020s.
Reporting by Vera Eckert, editing by David Evans