PPA Valuation and Advisory

KYOS offers support to value renewable Power Purchase Agreements (PPA). We accompany you through the entire PPA life cycle, with pricing, risk analytics and dispute resolution.

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?

PPA Valuation

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:

  • Deal valuation: KYOS performs the main valuation of the PPA for either buyer or seller. KYOS can also provide advice in structuring the PPA. Shift the risks of the PPA in accordance with your company’s risk profile. This can be a one-off valuation request or under a framework agreement.  In that case you can get  access to KYOS PPA valuation expertise for multiple calculations.
  • Second opinion: KYOS valuations are used to benchmark own, internal, valuations.
  • Dispute support: KYOS performs independent valuation of existing PPAs. The number of PPAs is growing rapidly in Europe and many PPAs have been concluded some years ago. PPAs might include ambiguities which lead to disputes between contract parties. KYOS provides reliable support to settle such disputes in a fair way.

Renewable production risk management

With a rinsing 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.

Advantages KYOS PPA Risk Management

  • All market and forward price curves included
  • Flexible deal capturing
  • Assess your risk positions and adjust your hedges accordingly
The PPA module lets the user create and capture any type of renewable PPA. KYOS put a lot of effort to find the right balance between offering a robust deal capture system and a fully flexible spreadsheet solution. On one hand, we include standard PPA pricing mechanisms for certain countries and technologies. On the other hand, we offer the unique feature that users can add their own pricing structures to the system. For this purpose we offer an easy-to-use Python programming interface.

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.

Other Solutions

Optimization & Valuation

KYOS offers fast and accurate solutions to value flexible assets and contracts in energy markets, such as power plants, gas storage facilities and swing contracts.

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Portfolio management / CTRM

Does your company have a significant exposure to commodity prices? Then KYOS has a cost-effective solution for your daily management. The KYOS CTRM offers a detailed insight in your exposures, expected cash-flows, Mark-to-Market and more.

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Risk analytics

KYOS offers unique software for measuring portfolio risks in energy and commodity markets. The risk analytics include Value-at-Risk, Cashflow-at-Risk and Earnings-at-Risk.

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Price analytics

Market prices, market price forecasts and simulations are essential ingredients in energy and commodity management. KYOS offers a suite of functions and quant models to create and analyze all these price series.

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Contact KYOS

KYOS
Nieuwe Gracht 49
2011 ND Haarlem
The Netherlands

E-mail: info@kyos.com
Tel: +31 (0)23 551 02 21

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