By Vish Sharma, Head of Power Purchase Agreements at npower Business Solutions
With increasing organisational focus on environmental responsibility, and with security of supply and price stability also major concerns, independent – or on-site – generation can provide a credible alternative to centralised power and its fluctuating costs.
Over the past few years, the energy industry has seen a huge amount of choice when it comes to new generation technologies and systems. From ‘deep green’ renewables such as wind, solar photovoltaic (PV) and hydro, to baseload sources of power produced from organic matter such as biomass, businesses now have a wide range of options if they want to move their power supply away from the standard grid supply offering.
So, if you are the owner of an energy generation asset, what is the best way to get your power to corporate buyers?
Our new guide – ‘How to make the most of an energy generation asset’ – outlines the key routes to market.
Power Purchase Agreements: fixed or flex?
Power Purchase Agreements (PPAs) are contracts that agree energy production output and its subsequent purchase. They are made between asset holders who generate renewable power and commercial buyers. In short, they are a valuable route to market for generators to sell their power.
As an established method of managing energy sales and risk in generation projects, PPAs encompass all the commercial terms, including start date, delivery schedules, pricing mechanisms, payment terms and can include renewable certificates such as ROCs and REGOs. They are usually valid for several years and offer pre-set or to be determined prices for energy sales.
A PPA can cover an existing generation asset or provide assurance and confidence to investors in the financing of new renewable projects. PPAs can therefore be agreed prior to a project becoming fully operational.
Typically offering either fixed or flexible pricing arrangements, PPAs can provide an array of different pricing structures, depending on your requirements.
Working with a partner that provides a bespoke approach should also be at the top of the decision-making process. We know there is no one-size-fits-all approach to meeting the energy requirements of businesses, so it’s important to work with a partner that is technology agnostic. For example, we work with a large variety of generation projects across differing technologies and generation profiles , so end user businesses have as much choice as possible.
Unlocking the benefits of energy generation
Whether you are an independent generator, or an organisation with a sustainable on-site generation asset, there are several benefits to selling the power you generate.
Environmental: making the switch to renewable power will help your organisation, other businesses, and the UK, meet our collective sustainability targets.
Reputational: becoming an independent generator of renewable energy will enhance your reputation among your target audiences.
Commercial: selling your excess power will provide you with a regular revenue stream to reinvest in additional sustainable technologies. You can also sell your renewable certificates (ROCs and REGOs), which will be used by suppliers to demonstrate that all or part of their energy comes from renewable sources.
Whatever your organisation’s motivation, selling your power and renewable certificates provides economic, environmental, and social benefits, and will allow you to contribute to a more sustainable and resilient energy system.
If you are at the start of your energy generation journey, npower Business Solutions has produced a new guide to help you get started, which can be downloaded here.
