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PPA economics and commercial assessment

Compare long-term renewable electricity contracts with your existing sourcing structure.

What is a PPA?

A power purchase agreement defines the contracted delivery and settlement of power over an agreed term. Structures vary significantly and can be physical or financial.

Risks and benefits

Pricing certainty and renewable sourcing opportunities must be weighed against volume risk, shape risk, imbalance settlement, credit exposure and contractual restrictions.

How to begin

Start with annual volume, preferably a quarter-hourly load profile, existing supply terms and the desired hedging share.

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From headline PPA price to procurement economics

Model an hourly match

Compare generation production with site demand to identify surplus and residual sourcing needs. Annual totals alone do not describe the commercial position.

Include relevant contract terms

Test profile and balancing cost, indexed components, settlement model, availability guarantees, certificates and credit support.

Show scenarios

Use multiple electricity-price assumptions and volumes. Every preliminary model should disclose its assumptions rather than presenting a single forecast as certainty.