Renewable Energy
A Guide to Corporate Renewable Energy PPAs
A power purchase agreement generally governs long-term supply of electricity and associated environmental attributes between a producer and buyer. It can improve price visibility, but volume, profile, credit and regulatory risks must be allocated clearly.
Physical and financial structures
A physical PPA links the contract to electricity supply arrangements, while financial structures may settle differences against a reference price. The suitable model depends on market access, accounting treatment and the buyer's load geography.
Shape and volume risk
Wind and solar output rarely match a buyer's hourly demand. Surplus and deficit volumes should be modelled with market prices and balancing costs so an annual MWh match does not hide hourly exposure.
Contract checklist
Test price indexation, floors and caps, generation guarantees, curtailment, collateral, change in law, certificate transfer and early termination under scenarios. Legal, technical and financial reviews should use the same assumptions.
Sources
Related articles
More STR Energy guides to continue exploring the topic.