Power Purchase Agreement Remit

Standardization – Because CPPAs vary in structure and length and most debt structures for projects are more than 10 years old, most companies and energy management experts have an obligation to simultaneously trap energy costs at five or seven years, making it difficult to find a middle ground in negotiations. Standardizing a CPPA form could create common ground in negotiations to help intermediation of these companies. [21] The European Federation of Energy Traders (EFET) has set up a standard CPPA for physical and financial PPAs, with an approach to the electoral sheet to adapt the agreement. This is the first standard CPPA applicable to all European countries to reduce transaction costs and facilitate the negotiation process. [22] EFET found that its standard CPPA is supported by important legal opinions and translated from English to other EU languages in order to promote admission throughout Europe. [23] Synthetic AAEs decouple the physical flow of electricity from the financial flow. This will further increase the flexibility of contractual agreements. With respect to synthetic chaining contracts (also known as sPPAs), producers and consumers agree on a price per kilowatt-hour of electricity, as does a physical AAE. However, electricity is not delivered directly to the consumer from the power generation facility. Instead, the producer`s energy service provider (for example.

B an electricity distributor) takes the electricity generated in its clearing group and acts (in the short-term electricity markets, to cite an example). The consumer`s energy supplier (for example. B, a municipal plant) obtains exactly the power profile that the manufacturer makes available to its energy service provider on behalf of the PPA consumer partner, the purchase being made on a platform such as the spot market. In the synthetic AAE, this flow of electricity is now supplemented by what is called a differential contract. In this contract, the AAEs parties aim to compensate for the difference between the agreed price of AAEs and the actual spot market price. This means that each counterparty in the AEA has two cash flows: one with the energy service provider concerned and the other with the AAE contractor. In any event, the payments add up to the price of the AAEs set at the beginning and offer both parties the desired price guarantee. Without direct physical delivery between the contracting parties (such as an AAE on site) and without a direct link between them (such as an off-site AAE), this is a simple and administratively economical AAE.

It is well suited to cases where a producer does not create or does not wish to create its own balance sheet group, to cite an example. The benefits of an electricity purchase contract include long-term price security, the ability to finance investments in new power generation capacity, or the reduction of risks associated with electricity sales and purchases. In addition, a specific physical diet can be provided with certain regional characteristics and certain original guarantees. Customers can take this opportunity to make their brand more sustainable and greener. The open end of the proposed contract also creates a great deal of leeway to reflect the preferences of facility operators and electricity consumers.