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The road to multi-buyer CPPAs

You have read the article « Renouvelables : 100%, tout le temps »

What did you conclude from it?

One of the lessons to take away is that if you want to have a chance of covering a significant portion of your consumption with CPPAs, you need to diversify technologies and, if possible, geographical origins. Another interesting point is that by multiplying the assets, you become less dependent on startup delays or failures of certain assets. If you are not an energy-intensive consumer, it is better to sign several small CPPAs rather than one large one. This reduces your financial risk and allows for better alignment between production and your consumption.

One small problem: 'large' CPPAs are cheaper because large plants benefit from economies of scale in their production costs. Therefore, the optimal solution is to enter into multiple multi-buyer CPPAs, where a single large production capacity signs CPPAs with several consumers for portions of its production. This way, you benefit from economies of scale, and thus lower prices, while still leaving 'room' to sign additional CPPAs.

Currently, this practice is rare in France. Voltalia established this type of contract in 2021 with 10 consumers on a 56 MW solar plant. This article explores the ins and outs of multi-buyer CPPAs.

The difficulties

If multi-buyer CPPAs are not common, you can imagine that there are inherent difficulties in this type of arrangement.

 

The first difficulty, for physical CPPAs, is that it exacerbates the challenges already identified in this article. If you have several different suppliers who need to integrate the electricity produced by a renewable capacity, it adds complexity when calculating the 'non-CPPA' electricity bill. You will need to choose a single balancing responsible entity for the renewable capacity, and this entity will then have to allocate the energy among all the CPPA buyers and their respective suppliers.

 

For financial CPPAs, delivery issues do not arise; however, calculating and distributing financial flows among all parties can be somewhat complex.

 

In both cases, managing and verifying the integration of production flows into a consumer's overall supply is not an easy task, and the more CPPAs the consumer signs, the more challenging this task becomes. For producers, in the case of greenfield projects, multi-buyer CPPAs are more complex for financiers to understand and evaluate, which can be an obstacle. In practice, however, the reduction in counterparty risk and the ability to serve a broader market, not just the largest consumers, should offset the initial difficulties.

 How to overcome them with Augmented Energy

None of the difficulties mentioned above are insurmountable, and Augmented Energy can indeed help you overcome them. We can balance renewable production within our balancing perimeter and make the balancing and reconciliation of the CPPA simple for both producers and consumers.

In the case of a financial CPPA, we can value the production at the day-ahead price (typically the reference price chosen), and then we automatically calculate and manage the financial flows between the various parties. If the day-ahead price is higher than the CPPA price, we will send an invoice for the difference to the producer and a credit note to the consumers. If the day-ahead price is lower than the CPPA price, we do the opposite.

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For physical CPPAs, we try to simplify delivery as much as possible. The simplest arrangement is for each buyer to receive a block of energy, fixed at the monthly level, which is sent to the perimeter of their supplier via a PEB (Block Exchange Program). This block is then easier for the supplier to integrate into their billing since they do not need to balance the plant. Augmented Energy then invoices the consumer for the portion of the block not covered by renewable production at the day-ahead price.

Augmented Energy allows you, as a consumer, to track the producer's output and the portion delivered to the spot market and/or the financial flows through a simple interface, making it easier to reconcile your bills. We can also go further by integrating all of your consumption and the electricity you purchase into the interface, so you can have a comprehensive view of your energy budget.

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For more information or for any additional questions, please contact us at the following email address: sales@augmented.energy

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