Bettergy offers companies a complete energy advisory service, consumption management and costs of production processes, acting as a communication link with the Electrical System.
Within this advice, we not only advise on the purchase at a fixed price, but we are acting:
- Advising on pool purchases (indexed).
- Purchase from a pool with coverage in futures markets.
- Direct purchase from the market or bilateral contracts (PPA).
A PPA, acronym for Power Purchase Agreement, is a contract between two parties, one of which generates electricity (the seller) and another of which intends to purchase electricity (the buyer).
The contract or PPA defines all the terms of the sale of electricity between the parties, including when its operation will begin, deadlines 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 20 or 25-year PPAs, however, in Spain, the approaches that are being made set the duration of the contracts between 5 and 10 years at most.
There are different types of PPAs on 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 non-compliance, additionally derived from the physical nature.
- Bilateral financial contracts make it possible to minimize the risks associated with the physical contract, carrying out settlement or contracting for differences. It is more flexible, the parties agree to exchange the 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 developer builds a generation facility with renewable energy in the most suitable location and pours that electricity produced into the national electricity grid. In this case, the seller and the buyer formalize a contract on the rights to the electricity generated, with the buyer obtaining a cheaper price than the usual market and the generator a stable price for the sale of electricity that makes the project profitable.
Bettergy helps energy distribution or marketing companies to structure the achievement of PPAs in different stages of development or even “Ready to build”, led by promoters with extensive experience, solidity and the ability to close firm agreements.
PPAs will play an important role in the electricity market. At Bettergy, we can help you 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.