All renewables PPA structures at a glance

German scientists have identified 18 typologies of power purchase agreements for the renewable energy market. Their research is intended to support policymakers, scientists and investors in implementing their own PPA analysis and choices.

A group of researchers in Germany has conducted a comprehensive overview of existing power purchase agreement (PPA) structures and characteristics in an effort to support policymakers, scientists and investors in implementing their own PPA analysis and choices.

“Given the sometimes complex nature of PPAs, this lack of a proper classification complicates further research and adoption by practitioners in the field,” the academics said. “Therefore, this study provides novel information by identifying, describing, and classifying different PPA structures to provide an overview, allowing for better orientation and comparability.”

The research group identified several PPA structures based on their main contract feature and noted that these structures are not mutually exclusive. The main parameters were generation technologies, energy attribute certificates (EACs), asset age and contract duration, counterparty type, multiplicity of parties, direction of delivery, asset location, third-party balancing, physicality of delivery, pricing structures, delivery schemes, storage usage, subsidies, and insurance.

The academics also created a “morphological box” including all 18 of the PPA typologies they identified.

“While it creates a structural overview of known renewable PPA contract parameters, the morphological box also provides a method for designing differentiated PPA contracts while respecting constraints and interdependencies between different contract parameters,” the team emphasized, noting that the box contains three more parameters – project, counterparties, and contract. “Furthermore, it can be used to estimate the amount of risk borne by the different contract parties.”

Moreover, the morphological box creates interdependencies between the contract parameters of the PPAs.

“Since the field of PPAs is constantly evolving and so far, there is no standardized definition for most of the available parameters, this analysis cannot fully ensure a complete set of existing interdependencies,” the researchers specified. “However, all interdependencies known are characterized based on the available data.”

The research findings are also aimed to support the standardization of contracts, they concluded.

The review was presented in the study “Review and morphological analysis of renewable power purchasing agreement types,” which was published in Renewable and Sustainable Energy Reviews. The group comprised scientists from Carl von Ossietzky University of Oldenburg and FernUniversität in Hagen.