Is a long-term PPA a real price hedge?
Power purchase agreement: what are the guarantees and start date?
Supplier/Buyer, Supplier/Buyer Parent Company or Supplier/Buyer Guarantor (as agreed between the parties) shall provide a parent guaranty to guarantee the Supplier’s/Buyer’s payment obligations under the PPA. If the acceptable credit rating of the Parent Guarantor drops below a required level, a Bank Guarantee will be issued.
Generation from renewable energy can be sold in different ways: as generated, take or pay, or pay as consumed. The underlying volume structure can be baseload, peak-off peak, block of hours, solar or wind profile, or client load profile. Everything depends on the customer’s needs and risk appetite.
Will the energy produced by the renewable power plant be equivalent to consumption?
The PPA provides a grace period for delays in COD, during which time the seller will pay delay damages. If COD is not achieved within the grace period, the buyer has the right to terminate the agreement.
Before signing the contract, an energy assessment of the facility is done with the buyer. After the construction phase begins, a periodic construction report is shared with the buyer as well. And once the plant is operational, the seller can provide ongoing information and data about production.