PPAs FOR LARGE CONSUMERS
Historic Opportunity
Energy cost in Europe is one of the highest in the world. This entails a lethal loss of competitiveness for a largenumber of economic sectors. In particular, the electro-intensive industry has seen the consequences of high energy costs materialised in the form of relocation to countries where energy costs are lower.
On the other hand, since 2015 we are witnessing in Spain an exponential development of large scale renewable energy projects. This is a large amount of renewable MW´s that are going to be incorporated to the electrical system in competition with traditional sources of generation. Due to technology development and market conditions these new generation assets are capable of delivering energy at prices that are well below the burdens consumers are currently suffering.
PPAs (Power Purchase Agreements)
What is a PPA?
A PPA (Power Purchase Agreement) is a contract between a renewable producer and a consumer whereby a long-term supply of electricity is agreed under pre-agreed conditions and at a pre-agreed price.
A PPA allows consumers to fix the price of electricity for a certain number of years, providing not only the certainty that electricity-intensive consumers need to operate their business but also helping to reduce pollutant emissions.
For the producer, a PPA means an assured output of its production at a competitive price over a long period of time.
Types of PPAs
Depending on the location of the production plant and its proximity to the consumer, two types of PPPs can be distinguished:
ONSITE PPA
The production plant is located at the consumer’s own facility and is connected to its internal electricity grid. The generating party to the contract is responsible for the design, assembly, installation, operation and maintenance of the generating plant, while the consuming party pays for the electricity at a much more competitive price.
OFFSITE PPA
The production plant is located in the optimal location for generation, whether it is a large photovoltaic, wind or hydroelectric plant that uses the general electricity grid to distribute the energy to the consumer.
Depending on whether there is a direct line between producer and consumer a PPP may be:
Physical PPA
- In a physical PPA the generating asset must be able to identify exactly how much electricity it is supplying to the consumer.
Virtual PPA
- This is a financial hedge in which both parties sign a contract to exchange cash flows that depend on an underlying, the market price of electricity. There is no physical exchange, but the generation asset exists and supports the transaction.
Depending on the type of agreement reached by the parties for the delivery of energy, there are three models of PPAs:
Pay As Produced MODEL
- The consumer buys all the energy generated in the production plant or a percentage previously fixed with the producer.
- The consumer bears the risk of generation variability.
Baseload MODEL
- The producer guarantees the supply of a fixed and uniform amount of energy throughout the year.
- The risk assumed by the consumer is reduced, but the producer’s risk increases as he undertakes to guarantee a stable supply.
Pay As Consumed MODEL
- The producer matches the customer’s consumption profile.
- In some cases, large generating capacity is required to guarantee the agreed supply.
At Cobaltiq we thoroughly analyse each case to recommend the option that best suits our client. Whether you are a producer or consumer, we advise and accompany you before, during and after signing the contract.
Advantages of PPAs
Consumer benefits:
- Electricity at a competitive and predictable price.
- Adaptability of the installation to the energy needs of the consumer.
- Energy from renewable sources and simple traceability.
- Reliable and consistent supply.
Producer benefits:
- High long-term income certainty.
- A close and long-lasting customer relationship is created.
- Secure and profitable investment.
- Ease of obtaining financing.
At Cobaltiq we have developed PPASquare, a platform where we connect renewable energy producers and large consumers interested in forming part of a PPA. A quick and easy way to find a suitable agreement for your company.
Take advantage of this unique tool in Spain!
¿What can Cobaltiq do for you?
Services for business consumers
- Design of an individualised energy purchasing strategy based on your interests and needs.
- Securing long-term bilateral contracts with producers.
- Management of the PPA transaction.
- Advice on wholesale market and short, medium and long term strategies.
- Energy consultancy.
360º PPA services for producers
- PPA according to your interests.
- Management of the entire PPA negotiation process.
- Consultancy during the contract period.
- Active management in the sale of electricity.
Because we have what you are looking for, get in touch if you are interested in a renewable PPA
Contact us
Address
Zurbano Street 45
28010 Madrid
t: +34 910 606 487
e: info@cobaltiqgroup.com