ERCOT PPA Pricing and Risk Mitigation

ERCOT has seen rapid growth in renewable energy, with 9.5 GW of solar and 2.4 GW of wind added to the grid in 2023, and more than 170 GW of renewable projects currently in the interconnection queue. This surge has created strong demand for Power Purchase Agreements (PPAs) as a hedge against price volatility. However, as a fast-changing system, ERCOT’s nodal persistency remains relatively low, exposing renewable projects with PPAs to fluctuating basis values and potential curtailment risks. Projects facing negative basis and significant curtailments can experience significant financial losses.

In this session, we will focus on PPA pricing and structures, covering key topics such as:

• PPA landscape:
  • What are PPAs, and what is the current PPA landscape in ERCOT?
• PPA pricing calculation:
  • How are PPA prices calculated from the perspectives of both offtakers and developers?
  • What constitutes fair pricing for Fixed-for-Floating Swap PPAs, and how do these prices vary across ERCOT regions?
• Basis risk mitigation:
  • What are the primary risks for projects covered by PPAs?
  • How can projects mitigate basis and curtailment risks through different PPA structures?

If you are interested in joining the session, please reach out to Danielle Startsev (danielle.startsev@auroraer.com).