Power purchase agreement (PPA)

In a PPA, you arrange the sale of the green power and possibly the Guarantees of Origin (GOs). At PZEM, our experts work closely with you to determine the ideal contract structure for your situation.

Financial security: Guaranteed and stable revenue stream.
Risk mitigation: Reduction of risks by hedging them in the PPA.
Financing benefits: Facilitates financing of projects through certainty of revenues.
Years of experience at PZEM

What is a Power Purchase Agreement (PPA)?

A Power Purchase Agreement (PPA) is a contractual agreement between an energy producer, often a producer of renewable energy through solar or wind farms (the seller). This agreement sets out conditions such as volume, price, and how certain risks like imbalance are managed. A key component of the PPA is the involvement of a balancing responsible party. This party plays a crucial role in balancing energy supply and demand, ensuring the stability and reliability of the energy network. The balancing responsible party also acts as the link between the producer and the consumer.

PPAs are often multi-year agreements that reduce risks from fluctuations in electricity markets by guaranteeing a predictable energy flow. A PPA provides a stable and predictable revenue stream for electricity producers, which can be essential for financing and subsidizing large-scale energy projects.

Who are PPAs suitable for?

Producers such as wind or solar farms

PPAs ensure financial stability and reduce risks for energy projects.

Guaranteed and stable revenue stream
Reduce risks by hedging them in the PPA
Facilitates project financing through certainty of income

Trading parties

A PPA offers many advantages for trading parties. Briefly, these benefits are as follows:

Flexibly adjust (curtail) electricity generation for higher revenues in response to market demand
Influence on market dynamics by controlling part of electricity supply
Ability to diversify and manage risks within the portfolio

Facilitate development

Developers of both wind and solar farms face specific challenges, including high initial investments, market access, and volatility in energy production. Power Purchase Agreements (PPAs) provide a crucial solution to address these challenges, and ensure stable revenues and growth for renewable energy producers.

The contractual establishment of a PPA allows renewable energy producers from wind and solar farms to make projects feasible for investment or subsidies. In addition, a PPA ensures a stable revenue stream from power generation, reducing risks and providing financial stability. The result is a guaranteed outlet for the electricity generated, which is essential for effective planning and financing of these renewable energy projects.

Customer story Nobian

This agreement with EP NL is an important next step on our road to carbon neutrality with 100% renewable energy by 2040. We are committed to buying electricity where we operate. This renewable electricity from the Gemini Wind Park will be used in our salt production and electrolysis. This makes an important contribution to making our products and energy use more sustainable, as part of our ‘Grow Greener Together’ strategy

Johan Hospers – Director Energy van Nobian

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