What is a PPA and why is it important?
PPAs are essential in electricity markets as they provide long-term stability for both energy suppliers and consumers, securing a reliable energy supply while mitigating price volatility.
What is a PPA's role in renewable energy?
PPAs are particularly important for renewable energy projects because they provide a secure financial framework that encourages investment in technologies like solar, wind, and hydroelectric power.
What are PPAs key components?
Price of electricity
The PPA specifies the price at which the electricity will be sold. A fixed price offers stability and predictability for both parties, while a variable price can reflect changes in market conditions or inflation.
Duration
The agreement typically spans a long period, often 5 or more years. This extended duration helps developers secure financing by providing a reliable revenue stream. It also allows buyers to lock in a stable price for electricity, which can be advantageous in managing electricity costs over time.
Quantity of electricity
The contract typically outlines the amount of electricity to be supplied. This can be specified in terms of megawatt-hours (MWh) or another unit of measurement, depending on the scale of the project and the needs of the buyer.
Origin of electricity
Combining PPAs with GOs allow buyers to specify preferences for the source of electricity, including renewable energy sources like wind, solar, or hydro.
Guarantee of Origin (GO) provide proof that the electricity is sourced from renewable energy or nuclear enhancing transparency and supporting sustainability goals.
If you wish to discuss your company’s clean energy solutions further, don’t hesitate to contact us
Rikard Dagerbäck
Sales Manager, Scandinavia
Tel: +46 73 758 2872
rikard [dot] dagerback [at] fortum [dot] com
Hassan El Mahdi
Sales Manager, Sweden
Tel: +46 70 859 3503
hassan [dot] el [dot] mahdi [at] fortum [dot] com