6 Risks You Need to Understand Before Entering into a Power Purchase Agreement
January 24, 2020
Congratulations! Your company has committed to reducing its greenhouse gas emissions. Now what?
For most corporations, reducing Scope I emissions (those caused directly by the company) is not enough. To reach your targets, its likely your company will also need to reduce its Scope II emissions, which are caused by purchasing energy from a utility that uses brown power in its supply.
There are several ways to reduce Scope II emissions, one of which is power purchase agreements (PPAs) with renewable energy projects. PPAs can be an economical way to acquire renewable energy credits AND facilitate the construction of a new renewable energy project, but they’re not without risk.
LevelTen Energy’s proprietary analysis has revealed that 15-20% of the variation in a PPA’s value is caused by six key risk factors that have little to do with price. These risk factors can impact the value of a PPA from $0-$50 per megawatt hour: Over a 15-year term, a change in value on the high end of that spectrum can result in an additional expense of millions, if not tens of millions, for your corporation.
In this downloadable PDF, you’ll learn the six critical risk factors that need to be evaluated before entering into a PPA. These include forward curves, generation shape, settlement hubs, renewable penetration, timing, and negative covariance. You’ll also learn ways you can mitigate other risks associated with a PPA, from evaluating projects, to negotiating the contract, to creating a diverse portfolio.
Download the guide today to make the most informed choice for your sustainability strategy: