Power Purchase Agreements (PPAs) for solar PV systems and wind turbines
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Our Power Purchase Agreements (PPAs)
We design our PPAs flexibly in consultation with the plant operators. These are some of the key features:
- No obligation to supply a minimum quantity
- Termination of the agreement without obligation to pay damages when using repowering options
- No liability for damages in case of total failure of a plant
- No additional securities in the form of bank guarantees
- Free choice between a price setting in the future market or merchant root to market agreement Fixed power purchase prices are also paid in times of negative prices and redispatch
The hedging of plants with fixed state-guaranteed feed-in tariffs can be classified into three different types:
- Additional fixed price regulation
- Change into market or merchant root to market agreement
- Conclusion of financial hedging
For the financing of utility-scale photovoltaic projects, the conclusion of a PPA is mandatory. PPAs for solar PV projects share some distinctive features:
- Longer terms: usually more than 10 years
- Higher relevance of the off taker’s credit risk
- Long-term assessments of price and volume risks
What is the composition of the fixed electricity purchase price?
To receive remuneration for the energy generated from renewable energy sources at a fixed price, it is necessary to conclude a power purchase agreement with an off taker. The off taker sells the energy generated in the future and assumes the risk of price and production fluctuations. In addition, plant operators can generate income from the sale of Guarantees of Origin (GoO). A Guarantee of Origin is a document that certifies electricity originated from renewable sources and is billed per megawatt hour of electricity generated. The sale of this certificate is usually part of the PPA.
The fixed power purchase price is the so called “future baseload price” minus a markdown for the off taker, which covers the risk of variable feed-in and includes the remuneration for the guarantees of origin. The future baseload price is a product on the power exchange for the constant supply of electricity over a defined period in the future. To be able to compare offers from different off takers, it is therefore primarily the discount that should be compared, as the future baseload price is variable over time.
energy consult as intermediary between plant operator and energy off taker
Energy consult combines two areas of expertise in the complex fields of plant operation and the electricity market and thus supports the conclusion of PPAs as an "intermediary" between plant operators and energy off takers. After conclusion of the agreement, energy consult also advises the operator on the timing of price fixing in the future market to achieve the highest possible fixed electricity purchase price for the operator.
As a plant operator, you can also count on the expertise of energy consult during operation and contact us with any questions you may have about power purchase.