Bettergy offers companies a complete service of energy consulting, management of consumption and costs of production processes, acting as a communication link with the electricity system.
Within this advice, we not only advise on the purchase at a fixed price, but we are also acting:
- Advising on pool purchase (indexed).
- Pool purchase with hedging in futures markets.
- Direct market purchase 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 buy electricity (the buyer).
The contract or PPA defines all the terms of the sale of electricity between the parties, including when it will commence operation, deadlines for delivery of electricity, penalties for non-compliance, payment terms and termination of the contract.
Globally, there are successful cases of 20 or 25 year PPAs, however, in Spain, the approaches that are being taken set the duration of the contracts between 5 and 10 years at the 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 consuming plant or delivery points. There is a risk of non-compliance, additionally derived from the physical nature of the contract.
- Bilateral financial contracts allow minimizing the risks associated to the physical contract, making the settlement or contracting by 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 renewable energy generation facility in the most suitable location and feeds the electricity produced into the national electricity grid. In this case, the seller and the buyer formalize a contract for the rights to the electricity generated, with the buyer obtaining a cheaper price than the usual market price and the generator obtaining a stable price for the sale of electricity that gives profitability to the project.
Bettergy helps energy distribution companies or energy traders to structure the procurement of PPAs in different stages of development or even “Ready to build”, by developers with extensive experience, strength and ability to close firm agreements.
PPAs will play an important role in the electricity market, from Bettergy, we can help you in the following way:
- General advice on the best form of energy purchase among the market alternatives.
- Selection of PPA typology.
- Identification of the best renewable generation project or developer.
- Technical analysis of the solar photovoltaic or renewable project.
- Legal, financial and negotiation of the PPA.
- Management of guarantees of origin.