PPAs (Power Purchase Agreements) are booming as a tool in the energy transition. The PPA allows renewable energy producers to guarantee the long-term sale of their capacity for easy financing. At the same time, consumers secure supplies at agreed prices, avoid market volatility, and demonstrate their commitment to the environment. Spain has emerged as a leader in solar PPAs in Europe. AleaGreen facilitates the search for counterparties.
PPAs: The perfect tool
for the energy transition Bilateral agreements for the purchase of energy (PPAs, or power purchase agreements) between energy producers and consumers or electricity retailers have become very popular in recent years. Their recent and rapid growth is due to the fact that it is a tool that is well suited to the needs of producers and consumers in the framework of the energy transition.
For renewable energy project developers, PPAs are ways to ensure that the energy they will produce is sold at a price or price structure that, while more or less flexible, limits its exposure to market price fluctuations over a period of many years, typically five to 15 years. In this way, they can ensure that there is at least a minimum flow of income, which in many cases allows them to obtain better financing conditions to build and start their projects.
For so-called consumers or retailers, consumers or retailers who are about to receive contracted energy, the PPA enables them to secure energy supply for years at an agreed price, while mitigating their exposure to market volatility and being able to demonstrate that the energy has a renewable source. In this way, retailers can sell green energy to their customers, while large consumers can achieve sustainability goals and reduce their carbon footprint. Development
of PPAs Although they have been in the headlines of professional media for the past four or five years, there is a long history of PPAs in many markets, particularly in the American continent. In Europe, PPAs have historically been signed mainly in the Nordic countries (Sweden, Norway, and Finland), as well as in the United Kingdom and the Netherlands. All these wind-rich countries dominate the European PPA market. Starting
in 2019, the PPA landscape began to diversify with new markets emerging, such as Spain, Poland, Germany and Denmark. Renewable energy in these countries has begun to grow rapidly, and the availability of projects to sell energy has also increased due to the willingness of these countries to enter into long-term agreements.
Recent leadership
in Spain and solar PPAs The technologies that underpin these agreements have changed as new markets have joined. Among the new players, Spain, Germany, Denmark and Poland, as well as France, Italy and Greece, the fastest growing technology is solar photovoltaic energy. Therefore, most of the new contracts are signed with photovoltaic power plants. This means that in recent years, most of the new PPAs have been related to solar photovoltaic energy, putting wind in second place.
Specifically, Spain currently leads in terms of the number and capacity of PPAs in Europe, and the majority of PPAs in Spain are solar, which leads to solar PPAs leading the European technology rankings. Price reference
for
the PPA When entering into an agreement on the price of energy delivered under the PPA, reference is made to the wholesale market energy price for the duration of the contract. Depending on the risk assumed by the parties to the contract, a premium or discount may be applied.
These market price expectations have determined the trend of PPA prices in recent years. In 2021, PPA prices began to rise as the 2022 energy price crisis approached. In the last quarter of 2022, at the height of the crisis, European PPA prices reached an all-time high. A reference for
estimate that value of the energy to be delivered in the future may be an electricity future market price. But prices in these markets are too volatile to be a reliable reference for prices in five to 15 years.
A more stable and reliable reference is the long-term price forecast. These forecasts provide stable price expectations and avoid volatility in the futures market, so long-term price forecasts are essential for parties entering into a PPA. AleaGreen provides the long-term forecasts needed by large and power-intensive consumers, promoters, developers, and renewable energy investors.
By serving the parties involved in the negotiation and signing of the PPA, AleaGreen serves as a hub connecting producers and consumers, facilitating the generation and implementation of the PPA. At a time when sustainability and environmental responsibility are fundamental corporate priorities, AleaGreen facilitates collaboration between renewable energy producers and consumers to accelerate the transition to a more sustainable and environmentally friendly world.
To analyze PPAs in a renewable energy project financing environment, Antonio Delgado Rigal, CEO of AleaSoft, will participate in the 10th Solar Forum organized by UNEF (Spanish Photovoltaic Federation) on October 5 under the theme "Have priorities changed in the analysis of financing risks?" Analysis group discussion.
AleaSoft Energy Forecasting analysis
of the European energy market outlook and the financing and valuation of renewable energy projects AleaSoft Energy The monthly webinar series organized by Forecasting and AleaGreen will feature a new webinar on October 19. At this seminar, Deloitte's speakers will participate for the fourth time to analyze the European energy market outlook for the winter of 2023 to 2024, the financing of renewable energy projects, and the importance of forecasting in auditing and portfolio valuation.
浙公网安备33010802003254号