Pricing and managing PPAs is not easy due to the wide variety of risks in the contracts, such as volume risk, price risk, counterparty risk, profile risk and imbalance risk. How can we help you in getting the best deal for your PPA?
PPAs often include complex pricing mechanisms, typically with price floors, risk sharing elements and specific reconciliation mechanisms. KYOS has a lot of expertise to value PPAs. This includes a fundamental power market model to create long-term electricity price forward curves, important given the long duration of many PPAs. In addition, we have software modules to simulate price and volume risks. These are necessary if you wish to assess the future earnings and hedging strategies.
Valuation support can be used for different cases. Some examples of the services we offer:
With a rising number of PPAs, the management of renewable power positions is of growing importance for many energy companies. Due to the often complex and non-standard nature of PPAs, it is typically difficult to capture the contracts in existing trade and risk management (ETRM) systems. Managing the PPAs in custom made, often spreadsheet based, solutions is therefore common. But, in the same way that companies decided to replace spreadsheet based solutions for standard trades, more focus is now to capture PPAs also in ETRM systems. The main advantages are: auditability, consistency of pricing methods, less time spent on maintaining many different spreadsheets and better control on user access.
KYOS offers a flexible web-based software package to effectively capture and risk manage PPAs. This package is part of the KYOS Analytical Platform, a user-friendly and intuitive system for energy market players.
The backbone of the system contains a market price and forward curve database. Furthermore it contains an advanced Monte Carlo simulation engine and various reporting and risk management tools, including earnings-at-risk.
In short, the PPA risk management system provides a complete picture of the electricity portfolio with renewable energy PPAs and related hedges. Reporting includes volumetric position, mark-to-market value, value-at-risk and earnings-at-risk.
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