What are the components of PPA prices?

BAL

Balancing cost

The difference between hourly scheduled electricity deliveries and hourly metered deliveries may cause extra income and/or costs depending on the difference between the prevailing spot respective balancing price for that hour

CRE

Credit risk

The risk that the offtaker will not be able to meet the agreed upon contractual payment obligations

DTD

Day-to-day change

Relative change of PPA Price from day to the other

LIQ

Liquidity cost

Marginal price effect from the trade of a given transaction volume

LTM MAX

Last twelve months maximum

Maximum price of contract over the last 12 months

LTM MIN

Last twelve months minimum

Minimum price of contract over the last 12 months

PPA

Power Purchase Agreement

Power Purchase Agreement, usually the full contract regulating the selling and purchase of the electricity produced between wind farm and utility

PRC

Price risk

Probability of loss occurring from adverse movement in the market price. Price risk is unavoidable but can be mitigated in form of hedging

PRO RISK

Profile risk

Uncertainty of revenues due to future realised correlations between produced volumes and spot prices

PaR

Profile at risk

Price, cost

Expected values as determined from static price curves, seasonality patterns, etc.

Risk

Risk component derived from dynamic simulations, reflecting price adjustments against potential losses

SEAS EXP

Expected seasonal profile cost

Cost (or gains) implied by the expected seasonality of the production compared to annual baseload

VaR

Value at risk

The loss potential at a predefined confidence level (usually P95 or P99) that a position might suffer over an assumed liquidation period (usually 1d or 5d). The concept was initially defined for liquid