When tackling the specific nature of wind and solar production in a PPA, there are multiple aspects to consider: intermittency, unpredicatibility and optimisation potential.

Intermittency

A wind or solar farm produces only power when the wind blows or sun shines. The power consumption of the end user is different. This means that the farm needs to be integrated in the portfolio of the end-user(s). An end-user can use the green power only for part of its portfolio. For the rest it is using grey power or other sources to fill up its need. An end-user can buy more green power than the size of its demand and sell on the excess green power. An end-user can full fill 100% of its portfolio need with wind and solar and then trade the hourly surplus and shortage on the power markets. Given the impact on the portfolio, it is important in the PPA to understand the potential delay of the farm coming online and to quantify the impact of delays.

Imbalance

Windfarm and solarfarm production on a daily basis can be predicted using weather-forecast- and generation- asset models. These predictions improve over time, with the model of the specific assets becoming ever better. However a large part of the hourly output remains unpredictable. This means that an end user will most likely enter the local markets to compensate for the fact that they are unable to deliver the predicted output to the grid. The balancing services and market mechanisms vary per country. In some country the grid operator takes the risks. In other countries the end user will have to pay for being in the short-term power markets of minutes, 10-minutes or 15-minutes to compensate for too much or too little production. The costs of these markets can be substantial. Having a detailed understanding of these markets is important to properly price the PPA.

To deal with grid-power nominations and short-term power markets there are multiple parties. Traditionally this was done only the utilities, now in many markets there are specialist parties providing these services.

Optimisation potential

To reduce the negative effect of the unpredictability of wind and sun, an end user can optimise the production and powernomination of the windfarm and solarfarm. An example of this is dispatch down. In cases short-term power prices become negative and a farm is unexpectedly overproducing, the end-user can ask the farm to reduce the power production. There is a wide range of other optimisations. A good understanding of the value of these optimisations is important to value the PPA.

On all above elements Wind4ind can support you.