Power Purchase Agreement (PPA) – Structure and Economics
Hilton Barbados Resort, Bridgetown,
30th September – 2nd October 2024
The objective of this course is to provide participants with a foundation in thinking about the underlying theory behind structuring and analysing different kinds of PPA agreements. The course will cover PPA contracts ranging from utility company off-takers to corporate PPAs that provide renewable electricity for data centres, etc. Issues addressed range from what should be the level of liquidated damages for various problems to how other contracts (e.g. O&M contacts) are mirrored to the PPA. Explanation of how merchant prices and resource risk affects corporate PPAs will also be covered.
The course covers the risk allocation in alternative contracts and underlying policy objectives; PPAs for renewable energy plants as contrast to fixed price contracts and background for Corporate PPAs; PPAs in the context of merchant power, and Corporate PPA contracts for renewable energy with partial merchant risk.
Actual PPA contracts will provide the basis for case studies in the course. The contracts will be used together with financial models that illustrate risks inherent in different PPA structures. The case studies include reviewing contracts associated with the PPA such as the financing contracts. The PPA risks together with the EPC, O&M and financing contracts are evaluated with completed financial models (participants will not be forced to construct model equations in excel).
Ably Led by
Mr. Edward Bodmer
- Formulated significant government electricity policies, advised on purchase of electricity generation and distribution, evaluated energy purchasing decisions for many corporations
- Author of textbook “Corporate and Project Finance Modelling, Theory and Practice”
- Former Vice President, First National Bank of Chicago, where he directed analysis of power projects, energy loans and created financial modelling techniques used in advisory projects
What Makes this Course Unique
The course covers a unique combination of theory and practical exercises and case studies involving electricity economics that provide the foundation for PPA analysis. This includes exercises where you measure the cost and benefits of specific PPA provisions; you work through real PPA contract provisions and understand why different PPAs have different contract structures; you work with real financial models and understand how the PPA affects debt sizing, debt repayment and ultimately the return to investors. Participants in the course also learn how to work with a set of resources that include financial models, databases, excel utilities, energy and finance books, contract examples, banking analysis and many other items.
This PPA course combines theoretical analysis of PPA provisions and structure with industry trends to provide an understanding of Corporate PPAs that are sourced from renewable energy. The course begins with deep analysis of PPAs with government or utility off-takers that evaluate issues such as how the level of liquidated damages should be established in different types of contracts. Before addressing specific issues in corporate PPAs, the economics of renewable energy that affect PPA contracts are addressed. As corporate PPAs generally incorporate some level of merchant price exposure, forward and spot markets are reviewed. The course culminates with discussion of corporate PPAs that can include merchant price risk, basis risk, shape risk and other factors. The course is unique in that actual examples of contracts are used together with financial models that illustrate risks and returns.
Pre-course Questionnaire
A pre-course questionnaire will be sent to you upon your registration which will allows you to raise your specific areas of interest. The trainer will review and analyze these in advance and address them during the workshops, seeking to fully satisfy your learning needs.
Certificate of Achievement
Upon the successful completion of this course, you will receive a Certificate of Achievement bearing the signatures from both the Trainer and the Organizer. This Certificate will testify your endeavour and serve towards your professional advancement.
For a copy of the FULL AGENDA, please send email to: hayat@neo-edge.com
Or please call us at Tel: +65 6980 8567
This course is in interactive and participative workshop format where participants will be encouraged to share their experience, and compare it with recognised best practice or other participants’. Real projects and case studies will form an important part of the workshop. Participants will have the opportunities to discuss and reflect on their own practices and ways to improve them.
Module 1: Risk Allocation and Case Study of PPAs
- PPAs in the context of alternative policy frameworks including cost plus and merchant power
- Policy arguments for alternative PPA contracts
- Risk Allocation concepts between Off-taker and Investor
- Project diagram and mirroring of construction and operating to the PPA
- Financing contracts that incorporate risk allocation in PPA contracts including target debt size and debt service coverage
- Financial model (completed) to evaluate risks in PPA contracts together with alternative financing from investor and bidding perspective
Module 2: Case Study of Alternative Contract Structures by Working Through PPA Provisions
- Background on dispatchable and renewable energy PPA contracts for different types of plants through review of contracts
- Risk allocation of resource risk and reasons for different pricing structure for projects that have non-dispatchable energy
- Resource risks in wind and solar from resource and controllable risks
- Examples of PPA contracts with performance ratio issues and power curve issues
- Mirroring contracts with equipment suppliers
- Implied penalties for availability and maintenance in renewable single price contracts
- Structure of financing contracts that support renewable energy and differences between financing used for standard contracts
- Financial model to illustrate the effects of different PPA terms and associated financing on investors and bid prices
Module 3: PPA Contracts and Electricity Economic Analysis
- Review of marginal cost concepts and merchant prices in different markets including effects of gas prices and renewable energy production Forward energy prices in merchant markets and forward natural gas contracts
- Why swap contracts do not apply in merchant markets and the difference between contract for difference contracts and swap contracts
- Quantity to use in forward price contracts
- Length of forward price contracts
- Forward price risk for renewable energy relative to natural gas projects and natural hedge
- Merchant Prices and Implications for PPA Analysis
- Simple forecasts of merchant prices after forward price hedge
Module 4: Structure of Corporate PPAs
- Alternative structures of PPA contracts in the context of merchant markets and renewable energy
- Issues with credit quality of off-taker and use of brokers in corporate PPA’s
- Case study of alternative language in Corporate PPA including use of contracts for differences, shape profiling and defining the hub price location
- Financing structure of corporate PPA’s given merchant risks
- Financial model to illustrate risks and investor returns in projects with corporate PPAs
- Evaluation of risks to debt and equity investors with financial model to evaluate basis risks, merchant risks after PPA term and resource risk
Wrap-up of the 3-day Course
For a copy of the FULL AGENDA, please send email to: hayat@neo-edge.com
Or please call us at Tel: +65 6980 8567
Ably Led by
Mr. Edward Bodmer
- Formulated significant government electricity policies, advised on purchase of electricity generation and distribution, evaluated energy purchasing decisions for many corporations
- Author of textbook “Corporate and Project Finance Modelling, Theory and Practice”
- Former Vice President, First National Bank of Chicago, where he directed analysis of power projects, energy loans and created financial modelling techniques used in advisory projects
Mr. Edward Bodmer provides financial and economic consulting services to a variety of clients, and teaches professional development courses in an assortment of modelling topics (project finance, M&A, and energy). Many of the unique analytical concepts and modelling techniques he has developed have arisen from discussion with his clients and course participants. Mr. Bodmer’s consulting activities include developing complex project finance, corporate and simulation models, providing expert testimony on financial and economic issues before energy regulatory agencies, and advisory services to support merger and acquisition projects. Mr. Bodmer has taught customized courses for MIT’s Sloan Business School, Bank Paribas, Shell Oil, Society General, General Electric, HSBC, GDF Suez, Citibank, CIMB, Lind Lakers, HSBC, Saudi Aramco and many other finance, energy and industrial clients.
Mr. Bodmer has written a textbook titled “Corporate and Project Finance Modelling, Theory and Practice” published by Wiley Finance. The book introduces unique modelling techniques that address many complex issues that are not typically used by even the most experienced financial analysts. For example, it describes how to build user-defined functions to solve circular logic without cumbersome copy and paste macros; how to write function that derives the ratio of EV/EBITDA accounting for asset life, historical growth, taxes, return on investment, and cost of capital; and how to efficiently solve many project finance issues related to debt structuring.
Over the course of his career Mr. Bodmer has been involved in formulating significant government policy related to electricity deregulation; he has prepared models and analyses for many clients around the world; he has evaluated energy purchasing decisions for many corporations; and, he has provided advice on corporate strategies. Mr. Bodmer’s projects include development of a biomass plant, analysis and advisory work for purchase of electricity generation, distribution and transmission assets by the City of Chicago, formulation of rate policy for major metro systems and street lighting networks, advocacy testimony on behalf of low-income consumers, risk analysis for toll roads, and evaluation of solar and wind projects. He has constructed many advisory analyses for project finance and merger and acquisition transactions.
Mr. Bodmer was formerly Vice President at the First National Bank of Chicago where he directed analysis of energy loans and also created financial modelling techniques used in advisory projects. He received an MBA specializing in econometrics (with honours) from the University of Chicago and a BSc in Finance from the University of Illinois (with highest university honours). Mr Bodmer was born in Manchester, England, he lived in Switzerland as a child, and currently resides in Chicago.
For a copy of the FULL AGENDA, please send email to: hayat@neo-edge.com
Or please call us at Tel: +65 6980 8567
Professionals who can benefit from this course include (not limited to):
- Potential project off-takers (e.g., owners of Datacenters)
- Project developers
- Project sponsors
- Lawyers working on Corporate PPAs
- Bankers – Credit Analysts
- Bankers – Relationship Managers
- Financial Modelers
- Equity Analysts of energy companies
- Government officers
This course is in interactive and participative workshop format where participants will be encouraged to share their experience, and compare it with recognised best practice or other participants’. Real projects and case studies will form an important part of the workshop. Participants will have the opportunities to discuss and reflect on their own practices and ways to improve them.
What Makes this Course Unique
The course covers a unique combination of theory and practical exercises and case studies involving electricity economics that provide the foundation for PPA analysis. This includes exercises where you measure the cost and benefits of specific PPA provisions; you work through real PPA contract provisions and understand why different PPAs have different contract structures; you work with real financial models and understand how the PPA affects debt sizing, debt repayment and ultimately the return to investors. Participants in the course also learn how to work with a set of resources that include financial models, databases, excel utilities, energy and finance books, contract examples, banking analysis and many other items.
This PPA course combines theoretical analysis of PPA provisions and structure with industry trends to provide an understanding of Corporate PPAs that are sourced from renewable energy. The course begins with deep analysis of PPAs with government or utility off-takers that evaluate issues such as how the level of liquidated damages should be established in different types of contracts. Before addressing specific issues in corporate PPAs, the economics of renewable energy that affect PPA contracts are addressed. As corporate PPAs generally incorporate some level of merchant price exposure, forward and spot markets are reviewed. The course culminates with discussion of corporate PPAs that can include merchant price risk, basis risk, shape risk and other factors. The course is unique in that actual examples of contracts are used together with financial models that illustrate risks and returns.
Ably Led by
Mr. Edward Bodmer
- Formulated significant government electricity policies, advised on purchase of electricity generation and distribution, evaluated energy purchasing decisions for many corporations
- Author of textbook “Corporate and Project Finance Modelling, Theory and Practice”
- Former Vice President, First National Bank of Chicago, where he directed analysis of power projects, energy loans and created financial modelling techniques used in advisory projects
Pre-course Questionnaire
A pre-course questionnaire will be sent to you upon your registration which will allows you to raise your specific areas of interest. The trainer will review and analyze these in advance and address them during the workshops, seeking to fully satisfy your learning needs.
Certificate of Achievement
Upon the successful completion of this course, you will receive a Certificate of Achievement bearing the signatures from both the Trainer and the Organizer. This Certificate will testify your endeavour and serve towards your professional advancement.
For a copy of the FULL AGENDA, please send email to: hayat@neo-edge.com
Or please call us at Tel: +65 6980 8567
Knowledge Partner
Oxford Business Group (OBG) is a global publishing, research and consultancy firm, which publishes economic intelligence on the markets of Latin America, the Middle East, Asia, and Africa.
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Event Endorser
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Media Partners
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For a copy of the FULL AGENDA, please send email to: hayat@neo-edge.com
Or please call us at Tel: +65 6980 8567
The training will be hold at the hotel stated below. The above fee does not include accommodation or travel costs.
Hilton Barbados Resort
Needham’s Point St Michael,
Bridgetown, 11000,
Barbados
Tel: +1 246-426-0200
Email: bgihi_hotel@hilton.com
For a copy of the FULL AGENDA, please send email to: hayat@neo-edge.com
Or please call us at Tel: +65 6980 8567
You are suggested to send registration or enquiries to us via hayat@neo-edge.com directly, which can enable us to respond faster than filling in the below Form.