Decoding renewable PPA prices in California's energy market
Meaning and Introduction A renewable Power Purchase Agreement also called a PPA is a long term contract between a renewable energy developer and a buyer of electricity. The buyer may be a utility company corporation public institution or large commercial customer. Under the agreement the developer builds and operates a renewable energy project such as solar or wind and sells the electricity at a pre agreed price for a fixed number of years usually between ten and twenty five years. In Californias energy market renewable PPAs play a central role in achieving clean energy goals. The state has aggressive climate policies that require increasing shares of electricity to come from renewable sources. Because renewable projects require high upfront investment developers rely on PPAs to secure predictable revenue streams. The price agreed in the PPA reflects expected market conditions technology costs policy incentives grid conditions and risk allocation between the parties. Adv...