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Green power
procurement and
PPA valuation support

With the cost of renewable electricity falling continuously and most major corporates and investors announcing ever more ambitious sustainability targets, the procurement of green electricity has moved centre stage. Options to procure green power range from purchasing guarantees of origin (GoOs), via power purchase agreements (PPAs) all the way to buying own renewables assets.

We help developers and off-takers understand the fair value of PPA structures and GoOs, advise utilities in positioning themselves in the PPA market, and help lenders quantify the risks inherent in offtake agreements.

Opportunities

While PPAs have been present in Scandinavia for several years, they only entered the mainstream in most European countries since 2018. Their emergence has made it possible for developers to finance renewable assets outside or in the absence of support schemes such as CfD auctions. Renewables developers have jumped on this opportunity, as have utilities seeking to provide balancing or sleeving services.

Challenges

While the opportunities presented by PPAs are considerable, so are the uncertainties. Contracting power over long time horizons creates significant merchant risks which should be analysed carefully by either contracting party to reduce to risk of costly disputes later on. Additionally, accounting for PPAs on balance sheets can be complex and requires marking them to market regularly.

Expertise

PPAs are one, but by no means the only option to procure green power. We advise our clients strategically to find the right option for them. Within the field of PPAs, we advise along the entire value chain, from renewables developers via off-takers to debt providers. Based on our market-leading fundamental models and our bespoke PPA valuation models, we are able to assess the fair market value of a broad variety of PPA structures.

To advise our clients holistically, we collaborate on PPAs with several leading law firms and financial advisors.

Key references

  • Developed a green power sourcing strategy for a major global chemical company
  • Sounded the several European PPA markets and provided valuation support for a major international technology company
  • Quantified PPA off-taker potentials by European country for a major European utility
  • Supported a major consumer goods company in regularly marking to market a PPA in their annual reports
  • Provided a country-by-country assessment of the PPA markets across Europe for a renewables developer
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