Energy Purchase & PPA

We offer companies a complete service of energy consulting, management of consumption and costs of production processes, serving as a communication link with the Electric System. Within this advice, not only advise on the purchase at a fixed price, but we are acting as a consultant in the pool purchase (indexed), buy pool with hedges in futures markets and direct purchase to market or bilateral contracts.

A PPA, an acronym for Power Purchase Agreement is a contract between two parties, one of which generates electricity (the seller) and another of which intends to buy electricity (the buyer). The contract or PPA defines all the terms of the sale of electricity between the parties, including when the operation begins, terms for the delivery of electricity, penalties for non-compliance, payment terms and termination of the contract.

At a global level, there are successful cases of PPA at 20 or 25 years, however, in Spain, the approaches that are making are fixing the duration of contracts between 5 and 10 years at the most. There are different types of PPA in the market, mainly Physical and Financial.

Physical PPAs are agreements between buyer and seller, in which the term, the amount of energy and the purchase price must be agreed, as well as the generation plant and the consumer plant or delivery points. There is a risk of default, derived additionally from the physical nature.

On the other hand, bilateral financial contracts allow minimizing the risks associated with the physical contract, making the settlement or contracting for differences. It is more flexible, the parties agree to exchange price differences between the price agreed in the contract and the closing price in the reference market. This indirect PPA is usually formalized in the electricity sector, when a promoter makes a generation installation with renewable energy in the most appropriate place and pours that electricity produced into the national electricity grid. In this case the seller and the buyer formalize a contract on the rights of the generated electricity, obtaining the buyer a cheaper price than the usual market and the generator a stable price of sale of electricity that gives profitability to the project.

Bettergy helps DSO or energy retailers  to structure the achievement of PPAs in different stages of development or even “Ready to build”, in charge of promoters with wide experience, solidity and capacity to close firm agreements.

The PPA will play an important role in the electricity market. Therefore, we can help in the following way:

  • General Advice on the best way to purchase energy among market alternatives.
  • Selection of PPA typology.
  • Identification of the best renewable generation project or developer.
  • Technical analysis of the photovoltaic or renewable solar project.
  • Legal, financial articulation and negotiation of the PPA. Management of guarantees of origin.

This post is also available in: Spanish