Wind Farm Offtake Agreement

In addition, ERM Power announced in March that it had signed a contract to sell LGC electricity and loss of revenue with Edify Energy to support the construction of the 58 MW Hamilton solar farm in regional Queensland. ERM Power will purchase all the energy and LGCs produced by the Hamilton Solar Farm. For projects that have won a CFD auction and have a long-term concession for operations, the duration of the traditional PPP does not necessarily affect the project`s banking capacity (there is only one risk of AAE replacement). In such cases, the price of AAEs is indexed to the cfD reference price and the buyer collects an administrative fee to represent the project on the wholesale market and perhaps a compensatory fee for the management of project imbalances. The proponent of the project may retain a shorter contract or guarantee exit options in order to benefit from a lower rate due to the increased competitiveness of the Offtaker site. As with conventional PPAs, the buyer`s long-term solvency is essential in the management of corporate PPPs. Many corporate clients have a strong rating, but corporate PPAs can also provide a guarantee from a creditworthy parent company and the publication of a letter of credit in the event of a decline in the buyer`s or guarantor`s credit quality. Shell Energy Europe, SSE Energy Supply and Danske Commodities will be responsible for 480 MW of installed generating capacity at the two wind farms. Proxy revenue swaps are similar to energy security contracts in many respects, but instead of an electricity distributor close to the bank, the swap provider is a weather risk investor, for example. B an insurance company, and instead of a fixed unit price per megawatt-hour produced or sold, the swap provider pays the project a fixed predetermined price for a “settlement period” (in one quarter). In return, the project pays the swap provider a “proxy turnover” multiplied by the market price at each commercial node multiplied by the “proxy generator” of the project, which corresponds to the amount of power that the project would have generated based on measured weather factors (for example, wind speed. B) and project capacity for the billing period, subject to pre-established assumptions about the operational effectiveness of the project.

The project sells its actual production to the dealer market at the node of the project. However, in the offshore wind sector, AAEs are growing, either because governments have begun to grant concessions under a cfD program, or because some projects have won auctions with a zero grant offer (meaning, in Germany and the Netherlands, that projects will be fully exposed to market prices). For many years, and in many European countries, onshore wind projects have relied on bilateral electricity purchase agreements (AAEs) to sell their energy to third-party customers, usually energy suppliers or licensed energy suppliers. Given the bilateral nature of the transaction, these AAEs can be structured in different ways, but are generally compatible with the renewable asset compensation system in place in each country. For example, in a cfD system where the project receives a variable premium from the state in addition to the reference market price, the PPP price is generally indexed to the reference price in order to avoid a basic risk and to set the total price (KKA plus premium). In cases where renewable assets are divided by the issuance of renewable energy (REC) certificates such as green certificates, AAE parties have much more freedom to negotiate alternative structures, both on the legs of electricity and on the deductable legs of the REC.