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PPA Advanced: Managing Market Risks for Wind and Solar

How can I assess and manage the risk of an increasing PPA portfolio?

Register for PPA Advanced: Managing Market Risks for Wind and Solar

Battery storage systems are becoming increasingly popular in the energy market. However, looking at the frequency containment reserve (FCR) market is no longer sufficient for economic operation. The aim is to find additional revenue markets. A multi-market approach for maximising revenue requires comprehensive understanding and quantitative analysis of the relevant market segments. In this seminar, we will show you marketing options on the wholesale spot markets and the balancing markets (ancillary services). We will also explain the influence of marketing strategies on capacity utilisation and profitability.

What are your benefits?

After this training you will be able to:

- Describe market risks in each of the most relevant PPA markets,

- Identify and handle risks in the context of PPAs,

- Evaluate the development of market risks for the next ten years, and

- Develop strategies in order to mitigate market risks along the value chain.

Agenda

Session 1: Analysis of PPA markets and structures in Europe

  • Types of PPAs in the most relevant PPA markets in Europe

  • Exercise I: mapping and categorising PPA risks

  • Pay-as-Produced, Pay-as-Nominated, baseload, virtual: What are prices, what are risks

Session 2: PPA demand

  • Different types of PPA buyers and their needs (case study)

  • Regulatory framework for more demand in PPAs and GoOs

  • Current landscape of hedge products in Europe (trading volume at the exchange vs. real consumption)

  • Different shades of green: What do corporates want and why?

  • Accounting pitfalls for corporates: virtual vs. physical PPAs

  • Exercise II: summarising PPA risks for corporate buyers

Session 3: PPA risks in the fair value approach - I

  • Deriving the “correct” base parity ratio (capture rate) and related weather risks

  • Shape risk consisting of price risk, volume risk and profile risk, incl. case study on a baseload solar PPA

  • Counterpositions at the derivatives market: stack-n-roll hedge

  • Case of virtual cross-border PPAs: risks and hedging

Session 4: PPA risks in the fair value approach - II

  • Assess balancing risks: analysis on spot market trade and balancing group management

  • GoOs: historic and future price and market development

  • Residual risks for PPAs

Session 5: Understanding the drivers of market risks

  • Understanding market price risk: commodities, fiscality, weather, and climate change

  • Overview: profile and shape risk in different European markets

  • Fusion of fundamental models and statistics: Energy Brainpool’s swarm scenario approach

Session 6: risk management 2.0 – portfolio optimisation

  • Modern portfolio theory and its use for PPAs

  • Influence on types of risk through diversification

Case Study: Impact of portfolio strategies on residual risks (for supplier companies)

Speakers

Target group

  • Specialists and managers from project developers, operators of renewable energy plants, energy suppliers, aggregators, traders, or industry

  • Employees of the energy industry from the areas of energy trading, sales, purchasing, procurement, portfolio and risk management

Exemplary Use Case

You are a professional in the energy industry and have frequently dealt with PPAs and their risks. Due to increasing volumes, risk measurement and management are becoming more and more important for you.

As a plant operator, financier, energy supplier or industrial bulk consumer, you want to gain an in-depth understanding which market risks your PPAs entail and particularly how they can be managed, e. g. by hedging or diversification of geographies and technologies. You would like to go beyond an analysis of historical data and have some insight into fundamental risk modelling, taking into account future power market developments across Europe.