Workshop Power Purchase Agreements (PPA)

Half-day interactive workshop where the DNV Energy Markets team provides insight into future electricity markets and evolution of (corporate) PPAs for renewable projects.

The first part of the workshop consists of a brief introduction into the topic, including explanation of what are the possible contract delivery approaches, pricing models and volume structures. Further, a high-level overview of all intrinsic risks, relevant for corporate off-takers, developers and lenders is presented. In the second interactive part, our team is ready to elaborate at a deeper level on what are the specific needs of a concrete client who wants to reduce its exposure to electricity market volatility. Various pricing structures will be compared, implying different level of market exposure. A reference can be made to DNV’s “Market Risk Assessment Tool” which quantifies future market risks and allows for a better pricing approach.

Outcome

As an outcome of the course, companies to whom electricity markets are relevant will gain a better picture of the future developments and risks. A special attention is dedicated to (dynamic) price risks. This is the main aspect to be assessed by a party who is procuring energy directly or financing renewable energy developers. Quantified examples of projected revenues are given for a typical RES asset so that the client gets a hands-on feeling of how certain market risks may impact the business case.

For whom?

This course is intended for lenders, finance institutions, corporate buyers, renewable developers, investers in RE projects and other professionals who wish to benefit from DNV's knowledge of energy markets and PPAs. 

Course topics

The following topics will be addressed:

■ Introduction to PPAs
    - contract delivery approaches
    - pricing models
    - volume structures

■ Intrinsic risks, relevant for corporate off-takers, developers and lenders

■ Interactive session, learning how to:
    - reduce exposure to electricity market volatility
    - compare various pricing structures
    - imply different levels of market exposure


PA Forecast - Why?

Today’s market risks are limited. However, with increasingly market based renewable investments and advances in market design, buyers and sellers of renewable energy are asking for:

■ more advanced market dynamic analysis

■ asset risks understandings and

■ assessment of the impact those risks have on contracts and business cases. 

This is getting more complex as price volatility increases as the share of renewables in the energy mix increases, and as price dynamics have more impact in a subsidy-free world. 

The analysis of PPA price development helps investors, developers and corporate off-takers to evaluate the level of uncertainty expected for three key determining factors – DAM price, Capture Price (Profile factor) and Imbalance costs (Imbalance factor). This might serve as a starting point for negotiating PPA contracts.


PPA Forecast - How?

The indicative PPA distribution is a product of the variability in DAM Price, Imbalance Factor (compensation for imbalance costs) and Profile Factor (compensation for price difference between average market price and asset capture price). The core of this dynamic calculation is a sophisticated stochastic approach to create a vast number of futures, all with realistic weather and price profiles for a certain renewable technology and bidding zone for a specific year. By creating full weather distributions, we obtain accurate profile and imbalance risk. 

Several other factors such as internal corporate risk appetite, bankability, management fees, etc. are not included in the analysis.

In case locational dynamics are to be included given a specific asset, DNV is prepared to deliver asset-specific dynamic risks, as the outcome of individual analysis may deviate from the overall trends.

Practical information

The course focuses on the European system as such, but quantified examples and market overview can be given on a country basis. 

In-company and customized training courses

On request, DNV can develop customized and in-company training course.
Content, location and duration of the course can be adapted to your specific needs.


For more information please contact us

Energy Academy
email: academy.energy@dnv.com
web: www.dnv.com/energy-academy
tel: +31 (0)6 29602659 / +31 (0)6 15063593 / +31 (0)6 18410601


About DNV
DNV is the independent expert in risk management and assurance, operating in more than 100 countries. Through its broad experience and deep expertise DNV advances safety and sustainable performance, sets industry benchmarks, and inspires and invents solutions.

Whether assessing a new ship design, optimizing the performance of a wind farm, analyzing sensor data from a gas pipeline or certifying a food company’s supply chain, DNV enables its customers and their stakeholders to make critical decisions with confidence.

Driven by its purpose, to safeguard life, property, and the environment, DNV helps tackle the challenges and global transformations facing its customers and the world today and is a trusted voice for many of the world’s most successful and forward-thinking companies.

In the energy industry
DNV provides assurance to the entire energy value chain through its advisory, monitoring, verification, and certification services. As the world's leading resource of independent energy experts and technical advisors, the assurance provider helps industries and governments to navigate the many complex, interrelated transitions taking place globally and regionally, in the energy industry. DNV is committed to realizing the goals of the Paris Agreement, and supports customers to transition faster to a deeply decarbonized energy system.

Learn more at www.dnv.com.