The EEX and KYOS webinar that we organized 30 June 2020 was a great success. The topic of this webinar was about managing long-term price risks in PPAs.
Viviana Ciancibello from EEX talked about the use of futures riskto hedge price risks and the 6 years horizon offered by EEX for virtually all markets. Next to that she explained initial margin and variation margin, with the help of examples coming from Spanish and Polish power trading. Lastly she mentioned that EEX will extend the trading horizon to 10 years, which will further support long-term hedging and the development of the PPA market.
Then Cyriel de Jong spoke about the different financial aspects of renewable energy projects and PPA projects, such as price, volume and capture rate. He then proceeded to power price forecasting, in particular long-term until 2030 and beyond. Interesting was the outcome of the poll held under the participants. When averaged, they thought that the level of the 2030 German power price would raise to Euro 46.3 Euro/MWh. This is a bit lower than the KYOS long-term price forecast (base scenario) of 50.5 Euro/MWh and also lower than the current Cal-26 settlement price on EEX of 49.5 Euro/MWh (Cal-30 not yet being traded).
Finally, Cyriel explained that the value of renewable generation also largely depends on the capture rate, and how this future capture rate can be estimated with a fundamental power market model. KYOS research indicates the capture rates will drop, especially for solar, but less dramatically than forecast by some consultants.
To view the slides of the presenters: KYOS EEX Webinar presentation slides
Don’t worry if you missed this webinar, we will organize more sessions after the summer holiday. These will again be about the financial aspects of PPAs. Follow us on Linkedin to see when the next one is!
The key message of the webinar is clear: for a good understanding and management of PPAs you need a solid price and capture rate forecast. KYOS is the leading provider of analytical software and data services in European energy markets. It offers an unrivalled web-based software platform to value PPA contracts, and to manage a complete portfolio of renewable assets and contracts. KYOS is also the number 1 provider of hourly price forward curves for European power.
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