About PPA - R.Power Renewables

Power purchase agreements (PPA)

A direct, tailor-made contract between a renewable energy producer and a large-scale energy consumer to procure clean energy at attractive prices while adhering to best practices in governance.

The offtaker contributes to the creation of new green assets through commercialization, enabling over 3TWh of energy and 500 MW of renewable assets with R.Power PPAs across multiple markets

Contact

Tomasz Szamocki
PPA Origination Senior Manager
+48 795 261 452
tomasz.szamocki@rpower.solar

About PPA

  • Power Purchase Agreement (PPAs) are contracts between two entities: one generating electricity (the seller) and the other looking to purchase it (the buyer). Together, they specify the terms for purchasing power from renewable sources, including price, quantity, and the duration of the agreement.
  • PPAs typically have a lengthy duration, often spanning 10 years or more, which is crucial as it enables the financing of the construction of new renewable energy projects.
  • For the energy consumer, the primary advantage of a PPA is the guarantee of energy price stability, which often leads to reduced energy expenses. In the case of solar PPAs, energy consumers can achieve significant electricity cost optimization due to the low cost of this technology. Moreover, solar asset offer lower PPA risk due to the low volatility of the volume of energy produced and lack of production at night.

Another significant benefit of PPAs is their role in increasing the proportion of renewables in the energy mix, thereby contributing to a more sustainable and cleaner energy future.

PPA types

Off-site physical PPA

  • Based on the PPA the Consumer pays for the energy delivered to him by the PV producer and for the Guarantees of Origin.
  • The PV producer does not take responsibility for the consumer’s imbalance – this is a subject of a different agreement.
  • Payments in physical PPA are defined by the price multiplied by the delivered volume of energy in each month.
  • The consumer is obliged to sign an agreement with the energy supplier who will fill the remaining energy for the consumer and deliver the balancing service.
  • In this agreement, it is crucial to indicate the PPA as the part that cover energy consumption. If the PV production exceeds the consumer’s energy consumption in a given hour, energy supplier will settle it on the balancing market.

Off-site financial PPA

  • The financial PPA defines the rules for settlements between the Consumer and the Producer. The amount of payments is calculated based on the difference between the PPA price and the market price.
  • The agreement is just a mechanism to secure the price. It is important to not hedge more energy than the Consumer used in particular year.
  • The Guarantees of Origin are settled in defined periods.
  • The Consumer signs a fully supply agreement with the energy supplier. The terms of this agreement are defined by the Consumer – no need to refer to the PPA.
  • However, it is good practice to set the price formula in the agreement that partially use the SPOT price – which is hedged in the PPA
  • In addition, the PPA might be the source for Guarantees of Origin, so there is no need to double this instrument a in full supply agreement.

On-site PPA

  • Customer signs the agreement with the green energy producer, who develops Renewables directly connected to the Customers buildings.
  • The on-site PPA price is defined by the parties. It depends on the Renewables financing (does Customer take part for Capex, or not).
  • Due to the connection formula, the agreement with supplier is independent to the PPA. However, the Distribution System Operator (DSO) should permitss the connection of PV.

PPA Volume

  • R.Power uses the best PV modules on the market. However, current technology requires the assumption of an annual decrease of productivity. This is calculated as 0,3% of the yearly generation.
  • The pay-as-produced formula means, that customer agrees to purchase the entire PV production across the year. Therefore, the volume produced in a particular hour should be settled.
  • The use of the pay-as-produced formula allows the Customer to accept Guarantee of Origin in an amount that is equal to the energy produced.
  • Before entering into the contract the customer should calculate the volume of the PPA. Our energy experts team typically assists clients with such calculations.

Contract for difference used in Financial PPA

  • According to Financial PPA, each month is calculated average market price [MP]for PV profile.
  • If the MPis higher than PPA price [PPA], then Producer pays to Consumer Monthly Settlement Amount [MSA +]
  • If the MPis lower than PPA, then Consumer pays to Producer Monthly Settlement Amount [MSA -]