power purchase agreements alex sifford ecos consulting portland, oregon
TRANSCRIPT
Power Purchase Agreements
Alex Sifford
Ecos ConsultingPortland, Oregon
www.ecosconsulting.com
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Nomenclature
• Power PURCHASE = utility view
• Power SALES = developer view
• Since good marketing looks for customer perspective, Purchase it is
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Power Characteristics
• Typically unable to store so physical delivery critical: where and when
• Utilities have differing requirements e.g., Supplemental or Full Requirements
• Baseload or Block Power = more commodity-like
• Variable or Peak Power = has most value if able to follow load
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Northwest Power Rates
BPA firm power rate schedules:• Preference Firm (PF) $29.60/MWh• Industrial Firm Power (IP-02)• Residential Load (RL-02)
• New Resource Firm Power (NR-02)
$50.40/MWh
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Value to the Purchaser
• Cost compared to other new resources• Risk factored into cost e.g., levelized costs
provide rate stability.• <Natural gas price forecasts are where
today?>• Credit stability of the Seller = rate stability• Baseload allows utility to back off other
resources
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Example Short-Term PPA
• One Page Term Sheet Bid
• 1 – 3 Years
• HLH period or Baseload
• Point of Delivery into BPA system
• Price in $/MWh
• Can be a starting point in L-T negotiations
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Example Long-Term PPA
• 24 Sections
• 55 Pages
• Comprehensive
• Current• Compare to Lender
requirements
• DEFINITIONS• TERM; FACILITY
DEVELOPMENT • REPRESENTATIONS
AND WARRANTIES • DELIVERIES OF
ENERGY AND GREEN TAGS
• PURCHASE PRICE; COSTS
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Example Long-Term PPA (cont’d.)
• OPERATION AND CONTROL
• QUALIFYING FACILITY STATUS
• SECURITY
• METERING
• BILLINGS, COMPUTATIONS AND PAYMENTS
• DEFAULTS AND REMEDIES
• INDEMNIFICATION AND LIABILITY
• INSURANCE
• FORCE MAJEURE
• SEVERAL OBLIGATIONS
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Example Long-Term PPA (cont’d.)
• CHOICE OF LAW
• PARTIAL INVALIDITY
• WAIVER
• GOVERNMENTAL JURISDICTION AND AUTHORIZATIONS
• SUCCESSORS AND ASSIGNS ENTIRE AGREEMENT
• NOTICES
• CONFIDENTIALITY
• DISAGREEMENTS • -------------
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BPA 2004 Transmission & Ancillary Services
Generation Interconnection requirements
• TBL interconnects new generating facilities to its transmission system. The process allows interconnection on a first-come, first-serve basis by signing up into the TBL queue.
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BPA 2004 Transmission & Ancillary Services
NT-04 Network Integration RatesBase Rate $1.028 $/kW-mo• Load Shaping $0.425 $/kW-mo
• Transmission customers purchasing Open Access Transmission Tariff service are required to purchase from TBL the Ancillary Services of: 1) Scheduling, System Control and Dispatch, and 2) Reactive Supply and Voltage Control from Generation Sources.
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BPA 2004 Transmission & Ancillary Services
Point to Point Service
• TBL provides firm and non-firm transmission from point(s) of receipt to point(s) of delivery under a tariff.
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Power Purchase Agreement Issues & Examples
• Definitions – whose practices
• Term – option to extend
• Project Configuration – share of output
• Purchase of Energy
– Net of parasitics – self supply
– Net of transmission to Pt. Of Delivery
– Wheeling - Line losses factored in
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Power Purchase Agreement Important Issues
• Credit Support – Parent or other backup
• Environmental Attributes (Green Tags)
• Milestones – environmental, transmission
• Seller Obligations – Leases, O&M
• Buyer Obligations – Able to take & pay
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Power Purchase Agreement Important Issues
• Transmission Issues – Queue, Ancillary Services, Firm Products
• Project O & M – Standards
• Security – Credit changes
• Defaults & Remedies – How to cure, rights v. obligations (see lenders)
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Power Purchase Agreement Important Issues
• Termination – terms, of convenience
• Dispute Resolution – meet, arbitrate, court
• Assignment – Control over to whom
• Confidentiality - $, promotion
• Force Majeure – both plant & transmission
Thank you
Thanks to George Darr, retired BPA,
and Joe Taffe, Power Manager, Clatskanie PUD for their help.