European players have noticed the rising use and expansion of short-term tenors and force majeure clauses that address high uncertainty amid high demand. The industry is now innovating ways to keep PPAs going strong.
Inflation and energy security goals have accelerated renewable targets and pushed demand for power purchase agreements (PPAs) higher throughout most of Europe.
Part of this demand was filled by virtual and shorter-term PPAs in a market still dominated by large IT multinationals which are used to acquiring it in different jurisdictions. But even as PPA volumes have increased over the past year, market conditions are becoming more and more uncertain.
Following a pandemic, a war in Ukraine and related commodity price inflation, there has been a rush to change which parties are bearing various risks, and which parties can reasonably help them do so. It may be that all can benefit by preventing any one party from wading too far into dangerous waters alone.
Some market players have noticed the rising use and expansion of force majeure clauses to deal with credit and regulatory risk, and some others have also see indexation of PPAs becoming the new standard.
In this publication, Tamarindo examines the PPA contracting strategies that players have adopted thus far in the European market.
This report puts questions to the experts:
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