LevelTen Energy is now providing automated analytics for market-indexed price offers on the LevelTen Energy Marketplace for North America and Europe, making it easier than ever before for buyers and sellers to transact on these price structures for PPAs. In a market-indexed price structure, a PPA settles by calculating a PPA price based upon a reference price, typically an average market electricity price. As a result, the PPA price can move from month-to-month, and a price floor can be applied as a lower bound. This differs from a standard fixed-for-floating price structure, in which the PPA price does not change.
Developers can upload market-indexed price offers on the LevelTen Energy Marketplace, and in proposals requested from buyers and energy advisors that use LevelTen’s RFP Automation tool. These offers will now have the same level of world-class, automated analytics as standard offers on the LevelTen Energy Marketplace, including the projected value, net cash flow, and range of probable outcomes for settlements. LevelTen runs 20,000 Monte Carlo simulations on every offer, every day, to assess how the offer will perform over the contract term. Buyers and sellers will be able to compare and rank market-index offers alongside standard PPA offers dynamically within LevelTen’s online Platform. Our CFO-Ready Analytics™ are based on daily tracking of historical and forward power prices in regional markets, projected power generation, renewable penetration, weather data, forward gas prices and more.
According to LevelTen’s latest Q1 PPA Price Index Report, prices for standard fixed-price PPAs have risen nearly 30% year over year in both North America and Europe, as a result of rising development costs and increasing demand for renewables. In these market conditions, PPA contract structures, like market-indexed offers, which provide for increased flexibility and a different allocation of risk between buyers and sellers, have become more commonplace as developers and off-takers push through these headwinds to get deals done.
“By delivering automated analytics on market-indexed price offers, we’re giving buyers the tools they need to quickly evaluate these types of offers against standard fixed-price structures, so that they can make the best decision for their business based on their procurement goals and risk tolerance,” said Rob Collier, Vice President of Energy Marketplace, LevelTen Energy. “In addition, we’re helping project developers raise visibility on these types of offers, which have become more popular as developers seek to retain exposure to rising wholesale electricity prices and potential upside during price swings.”
Want to learn more about market-indexed price offers? Your LevelTen account representative would be happy to discuss in more detail. Please reach out directly, or email info@leveltenenergy.com and a member of our team will get back to you to set up a call.
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