How to structure a power purchase agreement on a market without feed-in-tariff Sten Lillienau
Neas Energy in brief Nordics 2000MW Wind Neas Energy is an independent energy asset management company that provides physical and financial management of energy for customers with assets operating on liberal energy markets in Europe. Power Plants & CHP Plants Renewables (Wind, PV and Hydro) Utilities & Supply companies Neas Energy was established in 1998 in Aalborg, Denmark. 2011 acquired by a group of private equity investors. In 2015 Denmark s largest pension fund ATP and private equity firm Via Venture Partners acquired 30%. April 2016 100% acquired by British energy company Centrica UK 1000MW Wind & PV Germany 3500MW Wind & PV Key figures 2015: Turnover: 2 734,7 MEUR EBITDA: 18,6 MEUR No. Of Employees: Approx. 250
How to structure a power purchase agreement on a market without feed-in-tariff Sten Lillienau
Physical management Balancing Responsible Party (BRP)
Neas Weather Desk Neas Trading 6 Energy Meteorologists 24/7 environment 3rd party Suppliers WEPROG (Ensemble) ConWx (Physical) Wind/PV Power Forecast Short Term Day ahead Market Intraday Market Regulating Power Market Neas Energy Weather Models Online Data & Production Data Neas Tech Team 4 engineers Communication Exchange of signals
Financial Management
Different systems in the Nordics FI Limited feed in tariff (Fully signed new system coming) SE NO Marked based electricity certificate (Norway stops approving 2021) DK Guaranteed price for given amount full-load hours (Auction FIT for Off-shore)
Electricity certificate - market based support system Supply: 1 elcertificate per produced MWh renewably produced electricity Elcertificates are assigned monthly. Demand: Quota based on electricity consumption. Elcertificates are cancelled once a year 1 April Shall stimulate build out of 28,4 TWh new renewable production until 2020 Sweden will prolong the system but Norway will not. Last date for approval is 31 dec 2021. Swedish prolongation until 2030 additional 18 TWh.
Structured hedge instead of Feed In Tariff Exchange or Power Purchase Agreement PPA Physical Management Financial Management Offtaker
Structured hedge instead of Feed In Tariff Exchange
Structured hedge instead of Feed In Tariff Commercial PPA Offtaker
Structured hedge instead of Feed In Tariff Deficit power sourced BRP/Supply services Aggregation of Power Match expected load with expected production Surplus power sold
Structured hedge instead of Feed In Tariff Exchange or Offtaker Given price, for a given volume, for a given time period
Three components connected to hedged prices Profile compensation Volume risk Profile risk
Profile compensation Price Produced volume January December
Volume risk Production volume is larger and spot price is high gives advantage Production volume is larger and spot price is low gives disadvantage Volume Production volume is smaller and spot price is high gives disadvantage Production volume is smaller and spot price is low gives advantage January December
Profile risk - Spot price contra wind production Juni 2500 500 450 2000 400 350 1500 300 250 1000 200 150 500 100 50 0 0 Produktion vind Pris SE3
Without volume and profile risk Volume Given price Given volume Given time period 70% January December
Different structures and strategies Volume 100% Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year X
Different structures and strategies Volume 100% Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year X
Different structures and strategies Volume 100% Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year X
Different structures and strategies Volume 70% Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year X
Different structures and strategies It all depends!! Risk willingness Need of secured cash flow Type of investor Bank financing Etc.
Thank you for your attention Sten Lillienau Key Account Manager stl@neasenergy.com +46 72 560 5895 Stockholm Jesper Düring Key Account Manager jdl@neasenergy.com +45 40 64 64 44 Aalborg Web: www.neasenergy.com