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Glossary of Renewable Energy Procurement Terms

Anyone who is researching power purchase agreements (PPAs) for the first time is going to be hit with a barrage of jargon, acronyms and legalese. To help, we've compiled a glossary of terms related to renewable energy procurement. If you have questions about any of these terms, we'd be happy to help; just email

Energy Market Terms & Definitions


How the project will generate power. Solar and wind make up the bulk of renewable energy projects being built today. Projects with combined storage are also becoming more common.


Volume offered by seller, which may represent all or a portion (Buyers Share) of the project's production.

Commercial Operation Date

The date on which a seller notifies a buyer that a generating facility is operating and able to produce and deliver energy and any associated environmental attributes to the buyer under the terms of a commercial contract (e.g. PPA). This allows buyers to set their expectations for when a project will begin delivering energy and environmental attributes. It also holds the seller responsible for managing to those expectations and to stay on schedule during their development and construction of a renewable energy project. Often, if a contracted project is not operational by the C.O.D., the buyer will be eligible to collect damages from the seller.

Contract Start Date

Contract start date typically aligns with the Commercial Operation Date (COD) of a new build project. For merchant (existing) projects, it is the date the contract starts. 

Term Length

The length (in years) of the proposed power purchase agreement. The buyer will be agreeing to purchase power for the length of the term. Most projects will offer similar term length options.

Settlement Location

This is the trading hub, pricing node, zone, or other location at which your project will settle financially. LevelTen's Marketplace standard is for hub settlement.


Designates whether physical electrons are delivered from the project location to the buyer's meter. A financial PPA (or Virtual PPA) does not deliver physical electrons to the buyer's meter, rather the energy commodity is settled purely financially.

PPA Price ($ or €/MWh)

This is the fixed price per MWh that the Buyer agrees to pay the Seller in the PPA. What is actually paid by the Buyer or the Seller every month depends on the net settlement between the PPA Price and the Market Price.

Balancing Costs (Europe Only)

In Europe, there is no independent system operator. Instead, market participants called “Balancing Responsible Party (BRP)” forecast, schedule, meter, and deliver metered energy from renewable energy projects to the grid connection point, including any associated imbalance and/or market access charges. A BRP is needed both for the Production (generation) of electricity, and for the Consumption of electricity. The same BRP can handle balancing on both sides of the deal.

The cost of balancing services by BRPs in Europe is usually referred to as “balancing costs.” For PPAs that include balancing costs, sellers incorporate all Balancing Costs in its fixed PPA Price for the entire contract term, regardless of whether the seller can secure a fixed-price BRP contract for the entire contract term. Balancing Costs do not include any costs associated with shaping the generation profile, or with delivering power to consumption points (i.e. retail delivery). 


This is the annual percentage rate at which the PPA price will increase.


Contracts with ‘as generated’ offers will settle against the project's generation as metered onsite and represented by the 8760 production profile uploaded by the developer. ‘Proxy generation’ offers will settle against the pre-defined 12x24 shape as uploaded by the developer.

Market Price Floor

This is the wholesale market price (or floating price) below which the buyer will not make payments. The Market Price Floor caps a buyer's downside wholesale market price exposure by limiting the buyer's PPA payments to the PPA Price plus the Market PriceFloor.

I.e. if PPA Price = $20/MWh and the wholesale market price = -$5/MWh. Without a Market Price Floor, the buyer would pay the seller $25/MWh ($20/MWh minus -$5/MWh). With a Market Price Floor = $0/MWh, the buyer would only pay $20/MWh ($20/MWh - $0/MWh).

Non-Settlement Threshold

This is the wholesale market price (or floating price) below which the PPA will no longer settle (i.e. the trade quantity of MWh in the PPA will equal 0). This caps a buyer's downside wholesale market price exposure.

I.e. if PPA Price =$20/MWh, the wholesale market price = -$5/MWh, and the Non-settlement Threshold= $0/MWh. The trade quantity would equal 0 MWh because the wholesale market price is below the Non-settlement Threshold. The buyer would make no payment to the seller.


The environmental attributes or Renewable Energy Certificates/Guarantees of Origin, either associated with the project (project RECs/GOs) or sourced from another project (swapped RECs/GOs) 

RECs Certified (North America Only)

Certified RECs guarantee that the RECs have been produced in a manner consistent with Green-e standards. Green-e has compliance, verification, and chain-of-custody requirements to ensure the buyer receives the REC they intended to purchase.


Offers marked ‘included’ will confer all capacity/resource adequacy market bidding rights and benefits to the buyer.

Day Ahead/Real Time

This refers to which market the contract will be contractually obligated to settle against. For projects in Europe, only Day Ahead is available.

Calculation Interval

The period of time, usually 5-min, 15-min, or hourly, over which the project/buyer calculate the differences (either positive or negative) in the PPA price and wholesale electricity market price.

Settlement Period

The period of time, usually monthly or quarterly, over which the PPA invoice is calculated. This is the frequency with which the seller will make or receive payments under the PPA.

Seller’s Security

A letter of credit, guaranty, or other financial collateral provided by the seller for the benefit of the buyer to be drawn upon during cash shortfalls or default events. This is the amount the seller will be required to post within 30 days of executing the PPA and maintain pre- and post-COD. Seller must incorporate this carrying cost into the offer price.

Buyer’s Security

A letter of credit, guaranty, or other financial collateral provided by the buyer for the benefit of the seller to be drawn upon during cash shortfalls or default events. Buyers with investment grade credit ratings do provide an additional form of Buyer's Security. The amount a sub-investment grade or unrated buyer will post within 30 days of executing the PPA and maintain over the life of the PPA. The seller can draw on the Buyer's Security during cash shortfall or default events. If a sub-investment grade or unrated buyer receives an investment grade credit rating, they will no longer be required to maintain the Buyer's Security.

Delay Damages

Payments due to the buyer if the seller misses its targeted COD. 'Delay Damages’ penalize the seller for missing the targeted COD. The developer factors these penalties into the project's proposed COD.

Capacity Buydown

Payments due to the buyer if the seller does not complete the project to the expected size. ‘Capacity Buydowns’ penalize the seller for underbuilding the project. The developer factors penalties into the project size.

Availability Guarantee

A commitment from the seller that the project will be available to generate energy for a certain percentage of the year (usually between 85% - 95%). The‘ Availability Guaranty’ ensures buyers receive roughly the number of EACs they expected.

LevelTen Energy

LevelTen Energy is the leading provider of renewable transaction infrastructure, delivering the marketplaces, software, automated analytics, and expertise required to accelerate clean energy transactions. The LevelTen Platform is the world’s largest online hub for renewable energy buyers, sellers, advisors, asset owners and financiers. The Platform includes the LevelTen Energy Marketplace, which delivers access to more than 4,500 power purchase agreement price offers spanning 28 countries in North America and Europe. It also includes the LevelTen Asset Marketplace, which brings together over 800 renewable energy project developers and owners, and delivers the online tools and expertise they need to buy, sell and finance assets quickly. Together, LevelTen and its partners share #OneGoal to accelerate the energy transition.

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