Definition and role in the purchase of energy

B. PPA Horsed Site ou «Off-Site»

An «out of office» PPA «is a contract between an energy manufacturer and a consumer, whose production installation is not found on the user’s same site. In this case, the electricity produced is injected on the public network and the buyer is accredited for the corresponding amount of energy. This type of PPA is often used for large solar or wind farms that produce large -scale electricity for different consumers.

C. synthetic or virtual ppa

«Synthetic PPA», also called «virtual ppa» or «contract for difference» (CFD), is a financial form of power purchase agreement. Instead of physically supplying electricity, the manufacturer sells its energy to the wholesale market and the buyer compensates for the difference between the market sale price and the price set in the contract. The synthetic PPA offers greater flexibility but also risks relating to the volatility of market prices.

4. Energy purchase contract contracts

A. PPPA electricity purchase contract

A PPA electricity purchase contract ends between a renewable energy manufacturer and an electricity consumer. Based on this contract, the manufacturer undertakes to provide the electricity produced to the buyer, who undertakes for his part to pay a fixed price for this energy. The PPA contract therefore specifies the amount of energy that will be produced, the price that will be paid by the buyer and the duration of the agreement.

B. PPA photovoltaic contract

A photovoltaic PPA contract specifically concerns the energy generated by a sunny installation. Therefore, this contract is similar to a classic PPA, except for the fact that it establishes that electricity will be produced only by solar panels. As in any PPA, the manufacturer undertakes to deliver and the buyer to purchase the sun electricity produced during the contractual period at a fixed price in advance.

C. Corporate contract PPA

The company PPA (Business PPA) is a contractual agreement between an electricity consumption company and a renewable energy manufacturer. Often these contracts are used by companies with sustainability commitments or want to reduce their carbon imprint. Based on this contract, the company purchased green electricity directly from the manufacturer at a negotiated pace, often more favorable to the prices of the traditional market.

D. Green ppa

A green PPA is a green electricity purchase contract as part of which the buyer, generally an industrial company or a vast commercial area, undertakes to buy all the electricity produced by a specific green energy project. This model allows the company to actively contribute to the transition to a low carbon economy while guaranteeing energy consumption at a competitive and predictable cost.

5. The advantages of the energy purchase agreement

A. Why do a ppa?

For a company that tries to integrate renewable energy in its offer, concluding a PPA contract allows you to anticipate and stabilize electricity costs, while contributing to the reduction of CO2 emissions. As for the energy producer, this guarantees stable income for a long period and therefore makes its project more attractive for investors.

B. Why have a solar ppa?

Having a Solar PPA contract also allows companies to better control their energy bill by reducing carbon imprint. Solar energy is today the less expensive energy to produce and is among the fastest to distribute. Furthermore, once in the service, they do not produce or emit greenhouse gas or nuclear shocks. Their very large duration (from 30 to 40 years) allows you to quickly absorb the environmental impact necessary for the production of solar panels (less than 3 years to compensate for the C02 versions). Companies can therefore align with their sustainability objectives, benefiting from a stable long -term electricity rate, which facilitates their financial planning.

C. for industrial and tertiary companies

For companies that consume electricity, a PPA is an effective way to protect you from the volatility of energy prices by promoting the development of clean energy. The price of electricity is set for a long period, generally twenty or more years, which allows you to avoid market fluctuations and benefit from long -term visibility.

6. The risks associated with energy purchase agreements

Although PPA contracts have several advantages, they also have risks that it is possible, fortunately, to limit.

One of the main risks concerns the price of energy: if market rates become lower than those established in the contract, the buyer will be a loser. However, the latest market developments and the ever -growing demand for this energy make a drop in market prices unlikely in the coming years. In addition, opting for a «on -site» PPA, this risk is almost non -existent since the negotiation of the initial price will not be subject to pressure from the electricity market but the investment that the company will manage that it will manage the solar plant that will be installed on the roofs, on your parking or related land.

Finally, long -term PPA can also present a risk in terms of liquidity, since they commit the buyer to pay a fixed sum for several years, even if his needs or financial situation change. Here too, the risk is limited in the context of a «on -site» PPA since the contract will be signed on the basis of the production capacity on site and the electricity needs of the company on site. A precise and rigorous study on adequacy between production and consumption will limit or even cancel this risk.

7. The purchase agreement of power and consumption

If you produce energy thanks to the solar panels, for example, and choose to consume it alone rather than sell it, let’s talk about self -consumption. In this case, a PPA can be signed to resolve the terms of sale of your energy surplus in the network. However, this model is not widespread in France today, where small electricity producers can sell their excess energy to EDF or to another local distribution company, as part of a purchase contract contract.

In addition, the PPA mechanism can be an excellent way to access a form of self -consumption in the form of leasing, without initial investments. Therefore, as company director, rents the roofs, parking lots and/or landing to a solar operator who will make the photovoltaic installation carried out on the surfaces you have designated and will guarantee its exploitation. Therefore, you will become a customer of this solar operator who will sell you the Kwh produced at a negotiated rhythm, according to the PPA mechanism «on site». It is a great way to regain control over all or part of the energy budget, advancing in achieving its CSR objectives. Admit that as company director, it is rather an excellent solution!