Standardised guide to entering into a CPPA

A recently published report in Denmark has identified a large potential for Corporate Power Purchase Agreements (CPPAs) in Denmark. However, very few CPPAs have been signed in Denmark. This is in spite of: 1) A vast increase in the deployment of renewable energy (RE) and 2) Renewable energy developers need fixed price agreements to access financing and make it cheaper.

Many CPPA negotiations are stopped in the process since: a) Entering into a CPPA is complex and entails expensive negotiations. b) Denmark has a lot of SMEs for which the process might be too costly.

Copenhagen Economics was commissioned to create a standardised guide to the process and central concepts which reduces cost for firms to obtain necessary information, increasing the use of CPPAs.

We have taken a three-step approach to determine the central concepts, outline the process and identify costly pitfalls:

• Take the template CPPA of the European Federation of Energy Traders as a starting point.
• Sort the elements into eight central steps for entering into a CPPA
• Utilise in-depth interviews with market actors along the entire value chain of CPPAs and desk research to confirm these steps and determine issues, pitfalls and solutions related to each step

Based on this we have created a schematic overview of the process with explanation of each step and elaboration on related concepts.

 The standardised guide deals with concepts and issues such as:

• Price and evaluation of price
• The choice between as-produced and baseload
• Creditworthiness of buyer
• Certificates and additionality

 The study is commissioned by Erhvervslivets Klimaalliance.