Pricing bundled renewable energy credits using a modified LCOE for power purchase agreements

To reach Carbon Peak in 2030 and Carbon Neutrality in 2060, China is developing renewable energy at a fast pace. Renewable energy enterprises will participate in the power market in an all-round way as China gradually improves its electricity market. Signing the Power Purchase Agreement (PPA) helps renewable energy companies to avoid market risk and achieve sustainable development. Therefore, a novel PPA pricing model is proposed in our research. Based on the theory of the Levelized Cost of Energy (LCOE), our model considers system operating costs in China’s dual-track electric power sector, which is both government-guided and market-oriented. First of all, key influencing factors of the PPA agreement are analyzed in view of the developments of the renewable energy and electricity markets in China. Next, the design of pricing strategies for renewable energy power plants to cope with market challenges is presented through a photovoltaic project case study. The results show that when the operating costs of the system are considered and other conditions remain unchanged, the investment payback period of the new energy power station will change from 10.8 years to 13.6 years. Furthermore, correlation degree and sensitivity coefficient (SAF) were introduced to conduct correlation analysis and sensitivity analysis of key elements that affect the pricing of the PPA. Finally, it is concluded that the utilization hours of power generation have the most significant effect on the PPA price, while the system’s operating cost is the least sensitive factor. The study expands the application of LCOE, and provides a decision-making solution for the PPA pricing of renewable energy power enterprises. It is expected to help promote power transactions by renewable energy companies.

Making renewable energy competitive in India: Reducing financing costs via a government-sponsored hedging facility

In the U.S., individual states enact Renewable Portfolio Standards (RPSs) for renewable electricity production with little coordination. Each state imposes restrictions on the amounts and locations of qualifying renewable generation. Using a co-optimization (transmission and generation) planning model, we quantify the long run economic benefits of allowing flexibility in the trading of Renewable Energy Credits (RECs) among the U.S. states belonging to the Western Electricity Coordinating Council (WECC). We characterize flexibility in terms of the amount and geographic eligibility of out-of-state RECs that can be used to meet a state’s RPS goal. Although more trade would be expected to have economic benefits, neither the size of these benefits nor the effects of such trading on infrastructure investments, CO2 emissions and energy prices have been previously quantified. We find that up to 90% of the economic benefits are captured if approximately 25% of unbundled RECs are allowed to be acquired from out of state. Furthermore, increasing REC trading flexibility does not necessarily result in either higher transmission investment costs or a substantial impact on CO2 emissions. Finally, increasing REC trading flexibility decreases energy prices in some states and increases them elsewhere, while the WECC-wide average energy price decreases.

Power Purchase Agreements (PPAs) enjoy great success in Europe. This is especially true of Green Corporate PPAs (GC PPAs), also known as Corporate Renewable PPAs, which are agreements under which a corporate customer agrees to purchase renewable electricity directly from the electricity producer, pursuant to the definition set forth in the 2018 Renewable Energy Directive (‘RED II’) (Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 Dec. 2018 on the promotion of the use of energy from renewable sources (recast).). Nearly 14GW in PPAs were entered into in 2018 worldwide, of which 1.9GW in Europe (2017: 1GW) and approx. 8GW in the United States (2017: 2.4GW) (Europe Corporate Renewable, PPA Market Report 2018 – 2027.). Wind energy accounts for 85% of GC PPAs entered into in Europe to date, with solar energy accounting for the remaining 15%. This progress can be explained partly by an increase in energy demand worldwide, the companies’ willingness to reduce their carbon footprint and control energy costs, the need for clear and foreseeable price signals for investors and producers, but also the development of public support schemes for renewable energies (‘RE’). Power Purchase Agreement, Renewable Energy, Electricity, French Law, Energy transition, Corporate Social Responsibility

The subject of the presentation is Green Power Marketing for Waste To Energy Facilities. Many WTE projects signed long term energy contracts under the rules of PURPA. Several projects signed short term agreements. In other cases, power contacts were sold or assigned by the original purchaser or the project voluntarily agreed to a buy out. In any case, power markets have changed and are continuing to change. One of the most significant changes is the deregulation of the electricity market. WTE projects are no longer required to sell power to a captive utility. While electricity continues to flow through the same transmission lines, those lines may be owned by a different entity than the power purchaser, and will certainly end up as a transaction cleared by the regional power grid. In addition to “energy” and “capacity”, power can be sold as “green” or “renewable” for additional revenues. WTE power can be sold to wholesale purchasers for resale. Some WTE owners are becoming licensed to sell retail power, or arranging to wheel power to the local government which owns the WTE facility. WTE owners and operators depend on energy revenues to offset capital and operating costs. It is critical to understand how power marketing works. Most importantly, it is incumbent on each WTE owner/operator to make sure that Renewable Portfolio Standards established on the State and Federal level include WTE as a defined and eligible source of power. In the absence of Federal legislation, each State may set its own rules and requirements. Furthermore, States can set a renewable energy requirement for its purchases of energy. The panelists will present clear examples of the above from three points of view: Mr. Larry Plitch is an attorney who spent many years with Wheelabrator, and now markets power for Wheelabrator and other WTE owners. Ms. Robin Davidov is the Executive Director of the Northeast Maryland Waste Disposal Authority in Baltimore, Maryland. The Authority developed and financed three WTE facilities in Maryland, and owns two of the facilities. Ms. Davidov has been managing power sales for ten years, and most recently negotiated an electricity sales agreement with Mirant Americas Energy Marketing, L.P. Mr. Chris Pollatos is a Director with Mirant, and will speak about his experience in purchasing power from WTE and other renewable sources as well as wholesale power sales, including the sale of Renewable Energy Credits.

Berkeley Lab’s annual status report on U.S. renewables portfolio standards (RPS) provides an overview of key trends associated with U.S. state RPS policies. The report, published in slide-deck form, describes recent legislative revisions, key policy design features, compliance with interim targets, past and projected impacts on renewables development, and compliance costs. The 2017 edition of the report presents historical data through year-end 2016 and projections through 2030. Key trends from this edition of the report include the following: -Evolution of state RPS programs: Significant RPS-related policy revisions since the start of 2016 include increased RPS targets in DC, MD, MI, NY, RI, and OR; requirements for new wind and solar projects and other major reforms to the RPS procurement process in IL; and a new offshore wind carve-out and solar procurement program in MA. -Historical impacts on renewables development: Roughly half of all growth in U.S. renewable electricity (RE) generation and capacity since 2000 is associated with state RPS requirements. Nationally, the role of RPS policies has diminished over time, representing 44% of all U.S. RE capacity additions in 2016. However, within particular regions, RPS policies continue to play a central role in supporting RE growth, constituting 70-90% of 2016 RE capacity additions in the West, Mid-Atlantic, and Northeast. -Future RPS demand and incremental needs: Meeting RPS demand growth will require roughly a 50% increase in U.S. RE generation by 2030, equating to 55 GW of new RE capacity. To meet future RPS demand, total U.S. RE generation will need to reach 13% of electricity sales by 2030 (compared to 10% today), though other drivers will also continue to influence RE growth. -RPS target achievement to-date: States have generally met their interim RPS targets in recent years, with only a few exceptions reflecting unique state-specific policy designs. -REC pricing trends: Prices for renewable energy certificates (RECs) used to meet general RPS obligations fell in most markets in 2016, as surplus RPS supplies emerged in many regions. Price trends for solar RECs were more varied, with a particularly pronounced drop in MD. -RPS compliance costs and cost caps: RPS compliance costs totaled $3.0 billion in 2015 (the most-recent year for which relatively complete data are available), which equates to 1.6% of average retail electricity bills in RPS states. Though total U.S. RPS compliance costs rose from 2014, future cost growth in most RPS states will be capped by cost containment mechanisms.

Coal-fired power plants are the largest contributor to electricity production in China, and much of China’s total capacity in coal plants has been added within the last 10 years. However, the Chinese government has recently shifted from supporting the development of coal power plants to cancelling many proposed projects. In addition, government support of renewables, including solar, has increased dramatically. Combined with a stable or slowing national energy demand, China’s energy generation capacity is outpacing need. Curtailment in China typically begins with coal, and as such, the capacity factors on coal-fired plants are decreasing. All indications are that this trend will continue and extend to other fossil-fuel based generation in the future.Many Rankine power cycles found in fossil-fuel based electricity generation operate at steam temperatures around 550°C, a temperature that can be matched by Concentrating Solar Power (CSP) technologies operating with molten salts. An advantage of installing CSP technology as a hybrid with existing plants is the complete utilization of existing power block equipment, including the turbine, cooling, and power transmission systems. In addition, direct molten salt thermal energy storage allows the solar portion of the plant to operate through transient events or, if desired, up to 24 hours a day. The steam turbine can operate consistently at full load, and therefore the highest efficiency, while still directly reducing fuel consumption or maintaining the low capacity factor of the coal boiler. There are other advantages, such as a potential increase in plant capacity factor if currently limited by governmental regulations on the quantity of fossil fuels used, or increased revenue if a power purchase agreement or carbon emission credit can be reached valuing the solar portion of plant generation higher than the fossil-fuel portion.This paper examines the current state of the Chinese energy market and the variables above are explored to determine the engineering challenges, economic feasibility, and potential market for CSP hybridization with existing coal-based plants in China. Example sites are identified and evaluated, risks and challenges are addressed, and the final Levelized Cost of Energy (LCOE) and power generation results are compared to current Chinese pricing for greenfield CSP projects. The LCOE calculations used do not include generation from the coal side of the plant. These projects are economically attractive, achievable with today’s technology, and provide a market on the scale of gigawatts of installed CSP capacity.

This chapter examines power purchase agreement (PPA) structuring mechanisms to address project risks that manifest across renewable energy projects in several Asian countries. Using India as a case study, the chapter identifies the extent to which the standard PPA provisions address current prominent risks in the sector. It goes on to identify how existing provisions could be modified and newer structures could be included to ensure a more bankable PPA format. One key intended takeaway from this chapter is that the process of arriving at a standardised model for a PPA must be a constantly evolving one, taking into account the concerns of all project stakeholders, project risks and solutions across jurisdictions, to bring stability to the PPA models.

Background: During the whole life cycle of an offshore wind farm, from cradle to grave, logistics is needed. Particularly during wind turbine construction, vessels are intensively used. However, no study has been found to evaluate logistics costs during this particular turbine construction phase. Objective: In order to close this gap, this paper aims to propose an Offshore Logistics Cost (OLC) framework, evaluate OLC impact on total cost and identify recommendations to reduce this impact. Methodology: This study considers two quantitative approaches to evaluate OLC share. First quantitative approach is based on cost information found in twenty related studies from literature. Second quantitative approach was developed in two steps. A first step is a bottom up calculation model. This model performs OLC calculations for each scenario identified. In a second step, OLC results are used as input to two existing calculation models: National Renewable Energy Laboratory (NREL) simplified model and commonly accepted model developed by Megavind. Variance of results are then analyzed to determine a representative range for OLC impact on total cost. Results: Using some related values from literature review, this study assesses wind turbine construction offshore logistics to represent around 1.2% of Levelized Cost of Energy (LCOE). Using bottom up approach, this study evaluates offshore logistics during wind turbine construction with a broader contribution, conservatively from 0.6 to 7.6% of LCOE for offshore wind turbines over 4 MW power rating. It is also demonstrated that the higher the wind turbine size, the lower offshore logistics impact on LCOE. Conclusion: Offshore wind logistics costs during construction phase can represent between 0.6 and 7.6% of LCOE and it appears necessary to optimize these costs to contribute to a competitive LCOE. As main offshore logistics cost drivers have been identified, areas to reduce LCOE impact are suggested: increasing weather limits to reduce waiting on weather costs, minimizing work offshore, improving processes, using economy of scale and optimizing vessel use.

Financial instruments play a crucial role in accelerating the global shift toward renewable energy by reducing investment risks and encouraging long-term project viability. Mechanisms such as Feed-in Tariffs (FITs) and Power Purchase Agreements (PPAs) have become central to attracting private capital and ensuring stable returns in the renewable energy sector. The global transition toward decarbonisation has intensified the demand for effective, data-driven renewable energy policy design. This study aims to identify and compare international patterns in renewable energy incentives by analysing FIT and PPA lengths. Using k-means clustering on a dataset covering 67 countries and seven renewable energy sources over the period 2000–2019, the research groups countries based on the structure and strength of their incentive schemes. The results reveal eight distinct clusters reflecting different policy approaches, from high-support frameworks (e.g., Portugal) to minimal or inconsistent schemes. Some clusters prioritise long-term investment security through extended PPA durations, while others focus on targeted financial incentives for specific technologies. These findings demonstrate that cluster-based analysis provides valuable insights for benchmarking national policies and identifying transferable best practices in global renewable energy strategy

We estimated system-wise levelized cost of electricity (LCOE) for a power grid with a high level of renewable energy using our grid optimization model. The estimation results of the system-wise LCOE are discussed in terms of the nexus of energy, environment, and economic growth for Small Island Developing States (SIDS) economies. While 100% renewable energy is technologically possible with the usage of electricity storage, the estimated LCOE is as high as 397 $/MWh which is substantially higher than electricity prices for residential consumers in the US and Japan. The susceptibility analyses imply that the estimated LCOE increase of 223% with a 100% renewable power grid corresponds to an as high as 11% decrease in economic growth. This decrease in economic growth would have a significant negative impact on SIDS economies. However, hydrogen production via the electrolysis of water using the excess energy supply from solar photovoltaics would reduce the LCOE, and therefore, higher economic growth would be attained with less {mathrm{CO}}_2 emission.

This report helps Nordic governments assess the EU’s proposed toolkit (Regulation 2024/1747) to support Power Purchase Agreements (PPAs) and explore ways to increase their use. PPAs are long-term contracts that make renewable energy projects bankable, easing investment and construction. The study mapped the Nordic PPA market, surveyed stakeholders, and analyzed challenges such as price transparency, counterparty risk, and regulatory uncertainty. It shows PPAs have driven renewable energy growth but identifies areas for improvement, concluding that flexible, predictable policies—rather than one-size-fits-all rules—best support market innovation.

The costs of intermittent renewable energy systems (IRES) and power storage technologies are compared on a level playing field to those of natural gas combined cycle power plants with CO2 capture and storage (NGCC–CCS). To account for technological progress over time, an “experience curve” approach is used to project future levelised costs of electricity (LCOE) based on technology progress ratios and deployment rates in worldwide energy scenarios, together with European energy and technology cost estimates. Under base case assumptions, the LCOE in 2040 for baseload NGCC–CCS plants is estimated to be 71€2012/MWh. In contrast, the LCOE for electricity generated intermittently from IRES is estimated at 68, 82, and 104€2012/MWh for concentrated solar power, offshore wind, and photovoltaic systems, respectively. Considering uncertainties in costs, deployment rates and geographical conditions, LCOE ranges for IRES are wider than for NGCC–CCS. We also assess energy storage technologies versus NGCC–CCS as backup options for IRES. Here, for base case assumptions NGCC–CCS with an LCOE of 90€2012/MWh in 2040 is more costly than pumped hydro storage (PHS) or compressed air and energy storage (CAES) with LCOEs of 57 and 88€2012/MWh, respectively. Projected costs for battery backup are 78, 149, and 321€2012/MWh for Zn–Br, ZEBRA, and Li-ion battery systems, respectively. Finally, we compare four stylised low-carbon systems on a common basis (including all ancillary costs for IRES). In the 2040 base case, the system employing only NGCC–CCS has the lowest LCOE and lowest cost of CO2 avoided with CO2 emissions of 45kg/MWh. A zero CO2 emission system with IRES plus PHS as backup is 42% more expensive in terms of LCOE, and 13% more costly than a system with IRES plus NGCC–CCS backup with emissions of 23kg CO2/MWh. Sensitivity results and study limitations are fully discussed within the paper.

Humanity since its origins as a species has depended on energy for its existence and development. The various energy crises that have occurred have had major negative impacts on both the economic and social spheres. The current worrying world energy situation, characterized by a constant increase in demand, polluting emissions and rising prices of energy, as well as an inevitable depletion of fossil fuels, has in recent years generated a general awareness of the need to develop sustainable energy solutions. Currently, the high dependence on foreign suppliers for energy imports has put the accessibility and affordability of energy at risk, and States have had to develop numerous initiatives to protect consumers from volatile energy prices. In this framework, widespread energy production through renewable energy sources and the use of Power Purchase Agreements (PPAs) emerge as tools to achieve energy security and mitigate energy vulnerability and poverty. This research aims to contribute to this effort by making an approximation to the Cuban legal and institutional framework of PPAs. Cuba, in line with the current global energy context, is in search of energy sovereignty based on renewable energy sources. Throughout this article, it is intended to substantiate the need to regulate PPAs in the pursuit of sustainable energy development solutions. With the enactment of Decree Law 345 of 2019 for the promotion of renewable energy sources and efficient energy use and its complementary rules, the first regulatory foundations for PPAs have been laid. While the Cuban legal energy system has been making substantial progress regarding PPAs, it must still strive to be further perfected.

Due to over-consumption of fossil fuel and aggravation of greenhouse effects, renewable power system is one of the viable solutions for household application. Lithium-ion batteries are widely used for energy storage and constant energy supply for the excellent electrochemical performances. This work demonstrates a stand-alone renewable power system with battery storage for a household application. An integrated approach is proposed for optimal scheduling of household application, coordinated with the battery storage performances based onbattery charge/discharge characteristics. A mixed integer nonlinear programming (MINLP) model forscheduling of application and battery in household is established to minimize the levelized cost of energy (LCOE) of the system. Battery characteristics are optimized by considering the LCOE of the entire system. The strategies for application and battery scheduling in multiple periods are embedded into the model. Results show that the LCOE of the system obtained by the proposed model is reduced by optimizing the battery characteristics and multi-period scheduling schemes. The LCOE of the system depends intensively on the charge/discharge characteristics of battery. These results provide deep insights into design and operation of the battery storage system and the corresponding household power supply system.