Why Brady sees Igloo as an ideal solution for PPA valuation

Power Purchase Agreements (PPAs) are structures that can help to provide innovative financing and help speed up the development of renewable energy and other projects. In increasing use, they are now commonly a part of any energy trading portfolios. The PPA helps guarantee a revenue stream over a long-term contract, and helps reduce the financial risks associated with these investments while generating funding for, and revenue from, the asset, which is often a renewable energy asset. The PPA also provides both stability and predictability in the energy market by establishing fixed prices for electricity over the length of the contract  benefiting both generators and buyers while helping to manage financial risks and plan future investments. However, PPAs can be difficult to value, and according to Brady Technologies’ Alex Mewha, there are many challenges. Firstly, he says that PPAs are often very long-term contracts and that it is difficult, if not impossible, to predict future power prices over such lengths meaning that the value of the contract is diffiult to figure. He also points to the risks that PPAs are exposed to including credit, volume and regulatory risks saying that “Assessing and quantifying these risks accurately is essential for valuing the… continue reading