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The economics of a biomass-fired power project revolve around the pricing and terms of the power purchase agreement (PPA) between the project developer and the offtaker, and go well beyond the purchase and sale of energy. Negotiations also include the definition of, and the title to, renewable energy attributes, allocation of risks associated with curtailment and delineation of milestones and defaults, credit support and insurance.
Precise analysis of all the biomass attributes, especially the value of the renewable energy credits (RECs), is critical to estimating the total revenue stream available over the life of the project. In addition, the negotiating team must incorporate the impacts of the tax, accounting, and environmental benefits, financing models, and other economic factors impacting the developer, operator and offtaker.
The parties must decide who will bear the risk for losses that arise when the purchaser or transmission authority curtails generation from the project, whether for economic, system reliability, or system emergency reasons.
The PPA will usually require that the seller maintain specific insurance policies, and may include guaranties by creditworthy affiliates, cash collateral or escrow accounts, irrevocable standby letters of credit, or performance bonds. For their part, the seller will be looking for credit support and/or approval for rate recovery by the offtaker's regulator.
The negotiating team must evaluate the biomass supply agreements and pricing mechanisms.
Finally, consideration must be given regarding the technology being used and its performance attributes, warranties, and financing issues.
This webinar will cover methods to achieve business, legal, and strategic objectives in PPA negotiations for development stage or mature projects. It will explore physical power purchases based on model PPA provisions.
Who Should Attend - Consultants, lawyers and finance professionals
- Lenders and potential investors in renewable energy resources
- Independent power producers
- Long term energy planners
- PUC staff and commissioners
- NGO's and green advocacy groups looking to foster renewable adoption
- Government staff responsible for green program strategy and planning
- Renewable and clean-tech project developers
- Utilities analyzing renewable options, particularly those focused on biomass to power
Learning Outcomes - List and describe purchaser and seller objectives
- Classify and analyze pricing and payment methodology
- Distinguish default and cure processes
- Identify credit support arrangements
- Examine and appraise the impact of potential government development aids, grants, loan guarantees
- Analyze and distinguish fuel resource risks
Requirements for Successful Completion of Program Participants must be logged in to the web conference for its entirety to receive continuing education credit. Instructional Methods Web based PowerPoint presentation and on-line interactive question/answer session. Continuing Education Credits: EUCI is authorized by IACET to offer up to 0.1 CEUs for this program.
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