Knowledge Up, Carbon Down
Welcome to the Knowledge Up, Carbon Down series.
We want you to master the transformation to renewable energy in Australia, leading communities into the
zero-carbon world with ZEN. Click play and learn more about the Energy industry terms.
EPISODE 2 – What is a PPA?
Hi all! Welcome to our second instalment of Knowledge Up, Carbon Down.
Today we will be talking about a PPA with a grid-scale asset.
A PPA stands for Power Purchase Agreement, and it is a long-term agreement between a buyer and a seller of electricity at a fixed price.
The benefits of the PPA is that it reduces the time to market risk for an organisation and increases the sustainability metrics. The traditional approach of a PPA was for an organisation to contract a PPA directly with the renewable energy asset. This comes with a higher level of risk for the organisation. An example of this is my solar farm here and this is the generation curve. If an organisation is consuming outside of the times when the solar farm is generating, then they are exposed to the volatile Wholesale market.
A different approach is a lower-risk alternative, where a retailer, such as ZEN Energy, takes on that risk for the organisation. We take on the risk and package up the renewable energy contract into a low-risk simple, and finance-friendly offering, meaning that you are getting your renewable energy at times when you needed, at a price that is certain.
So just to recap, a PPA is a Power Purchase Agreement which is a long-term agreement between a buyer and a seller.
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