The long and short of it: When planning cycles go from 20 years to next-day

GREEN TECH MEDIA | As long-term PPAs become scarcer, integrating renewables into wholesale markets requires new levels of flexibility, the author writes.

The renewable energy industry is beginning to outgrow long-term power-purchase agreements (PPAs), and the trend is toward trading renewables on a shorter-term basis through participation in wholesale markets.

Long regarded as a crucial driver for institutional adoption of renewables, a PPA provides offtakers with a hedge against risks from future energy fluctuations by entering into a stable 20-year contract for renewable power in which the price for that power is locked in. When renewables were still costly and the risks high, PPAs were underwritten by major financial houses, allowing corporate procurers to buy solar and wind and set fairly relaxed schedules for renewable energy producers to deliver on the promised capacity.

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