The Power Purchase Agreement (PPA) is a fundamental pillar of any renewable energy project, offering two key benefits:
- Securing a Long-Term Electricity Price – The PPA defines the expected electricity sales price over the project’s lifetime, ensuring financial stability and predictability.
- Enhancing Investment and Financing Viability – By guaranteeing long-term cash flows, the PPA reassures investors and lenders, making financing negotiations smoother and more predictable.
In addition to PPAs, Contracts for Difference (CfD) have become a widely used mechanism, particularly in regulated markets. A CfD guarantees a fixed strike price for electricity, shielding the project from market price fluctuations. If market prices fall below the agreed strike price, the project receives a subsidy; if they exceed it, the project returns the difference. This structure provides further risk mitigation for investors and lenders, enhancing project bankability.
At Nenuphar Advisors, we specialize in structuring, negotiating, and securing the most advantageous PPAs and CfDs for our clients. Our extensive market knowledge and strategic approach ensure that projects achieve optimal financial outcomes while aligning with market conditions and regulatory frameworks.