| Type of risk | Details |
| Volume risk | Customer |
| Change in law | Customer or shared |
| Increase / reduction of benefits | Customer |
| Market liberalisation (if applicable) | Customer or shared |
| Credit risk | Customer |
| Imbalance power risk | Customer or shared |
| Production profile risk | Generally generator |
| Type of risk | Details |
| Volume risk | Information not publicly available |
| Change in law | Information not publicly available |
| Increase / reduction of benefits | Information not publicly available |
| Market liberalisation (if applicable) | Information not publicly available |
| Credit risk | Information not publicly available |
| Imbalance power risk | Information not publicly available |
| Production profile risk | Information not publicly available |
| Type of risk | Details |
| Volume risk | There is no market standard structure currently in place for this type of commercial arrangement in Belgium. |
| Change in law | There is no market standard structure currently in place for this type of commercial arrangement in Belgium. |
| Increase / reduction of benefits | There is no market standard structure currently in place for this type of commercial arrangement in Belgium. |
| Market liberalisation (if applicable) | There is no market standard structure currently in place for this type of commercial arrangement in Belgium. |
| Credit risk | There is no market standard structure currently in place for this type of commercial arrangement in Belgium. |
| Imbalance power risk | There is no market standard structure currently in place for this type of commercial arrangement in Belgium. |
| Production profile risk | There is no market standard structure currently in place for this type of commercial arrangement in Belgium. |
Not applicable.
| Type of risk | Details |
| Volume risk | If the generator falls short of the contracted power amount, it will need to acquire the necessary amount in the market to comply with the PPA. |
| Change in law | Neither party. Generally, corporate PPAs contain a provision establishing that in the event of change in law that affects the contract, the parties will renegotiate its conditions in good faith. |
| Increase / reduction of benefits | Given the private nature of contracts, it is difficult to generalise on this across the Brazilian market, but where the reduction of benefits is caused by a change in law, this may be covered by a change in law clause. |
| Market liberalisation (if applicable) | Not applicable |
| Credit risk | Offtaker or generator, depending on the credit rating of the parties involved. |
| Imbalance power risk | Not applicable |
| Production profile risk | Offtaker or generator, depending on the PPA structure and generator’s and consumer’s production and consumption profiles, respectively. |
| Type of risk | Details |
| Volume risk | Generator |
| Change in law |
It is not applicable. When the law changes, both parties will be subject to the law of the contract. If the law that has changed involves the public, then usually both parties agree to renegotiate the terms of the PPA. |
| Increase / reduction of benefits | Both parties |
| Market liberalisation (if applicable) | Not applicable |
| Credit risk | Offtaker |
| Imbalance power risk | Generator |
| Production profile risk | Generator. Incumbents can always withdraw electricity from the system to serve their contractual needs regardless of whether the electricity withdrawn was partially or totally produced by them. |
A CPPA could be sold to a corporate buyer via a utility company or through a self-generation scheme.
| Type of risk | Details |
| Volume risk |
CPPA via utility company: Offtaker. CPPA through a self-generation scheme: Generator |
| Change in law | Offtaker |
| Increase / reduction of benefits | Generator |
| Market liberalisation (if applicable) | Not applicable |
| Credit risk | Offtaker |
| Imbalance power risk |
CPPA via utility company: Offtaker CPPA through a self-generation scheme: Generator |
| Production profile risk |
CPPA via utility company: Offtaker CPPA through a self-generation scheme: Generator |
| Type of risk | Details |
| Volume risk | Where a PPA is based on fixed volume, the producer bears the risk. Conversely, with a pay-as-produced PPA, the off-taker bears the risk. |
| Change in law | The PPA will usually include change in law provisions, as this will usually prevent the PPA from being frustrated in the event of a significant change in law. |
| Increase / reduction of benefits | Depends on the specific PPA wording. |
| Market liberalisation (if applicable) | Czech Republic liberalised its electricity market through its Energy Act. As such, this is not a risk for CPPA parties. |
| Credit risk | Given the private nature of contracts, it is difficult to generalise on this across market, however depending on the relative strength of the parties, one party may wish to seek performance security from a party with lower creditworthiness. |
| Imbalance power risk | Depends on the specific PPA wording. |
| Production profile risk | Usually, this risk is allocated to the buyer, who acquires any missing volume from the market. Under the CPPA, a third party may also take responsibility for providing the missing electricity in order to manage this risk. |
| Type of risk | Details |
| Volume risk | As most cPPAs are based on fixed volumes with a take-or-pay principle, the off-taker bears the risk. However, this risk may be balanced using a net metering agreement with local distribution company which may then cover or purchase any shortfall or surplus of electricity. |
| Change in law | The cPPA will usually include change in law provisions, as this will usually prevent the cPPA from being frustrated in the event of a significant change in law. Such clause seeks to rebalance the original economic intentions of the parties. |
| Increase / reduction of benefits | The reduction of benefits is normally covered by a clause in the cPPA where it may render the PPA not economically viable; so the clause should stipulate that if the PPA is no longer economically viable to any of the parties, the parties will reconvene and reassess the model. |
| Market liberalisation (if applicable) | Currently, it is not applicable. But there is a plan adopted by the Egyptian government to liberalise the electricity market in 2025. |
| Credit risk | Most cPPAs are constructed based on a financing to be obtained by the generator, so the generator bears the risk. |
| Imbalance power risk | Balancing in Egypt is done by EETC, as detailed below. |
| Production profile risk | The consumption profile is usually more stable than the production profile. Usually, this risk is allocated to the buyer under a cPPA, and the buyer acquires any missing volume from the local distribution company. |
Not applicable.
| Type of risk | Details |
| Volume risk | The risk allocation for volume risk depends on the PPA type: pay-as-produced (offtaker bears the risk) or fixed volume model (producer bears the risk). |
| Change in law | Typically, the change in law provision seeks to restore the original economic intentions and balance between the parties, first through mutual negotiations of the effects of the change in law. |
| Increase / reduction of benefits |
Typically, the PPA delivery obligations also include the delivery of environmental attributes and those are often included in the contract price. The definition of environmental attributes may or may not also include the future benefits. The allocation of this risk can also be connected with a change in law provisions and follow the risk allocation mechanism under such provisions. |
| Market liberalisation (if applicable) | Not applicable. |
| Credit risk | Typically, some credit support under the PPA is required from both parties and at least if the financial standing of either party deteriorates. |
| Imbalance power risk |
In the absence of specific allocation, the liability would remain with the generator. |
| Production profile risk | Usually, this risk is allocated to the buyer under a cPPA and the buyer acquires any missing volume from the market. |
Coming soon.
| Type of risk | Details |
| Volume risk |
To date there have been very few corporate PPAs deployed in Germany and there is a lack of publicly available information on the specifics of relevant transactions. In many cases, corporate PPAs have only been used for marketing the production and sale of renewable energy from existing installations that – after 20 years following their commissioning – fall outside the support scheme. Therefore, at this stage, it is difficult to comment on general trends. |
| Change in law | As above |
| Increase / reduction of benefits | As above |
| Market liberalisation (if applicable) | As above |
| Credit risk | As above |
| Imbalance power risk | As above |
| Production profile risk | As above |
| Type of risk | Details |
| Volume risk | The seller usually bears the volume risk. The parties may mitigate this risk by including in a corporate PPA a take-or-pay clause, so they can effectively eliminate the risks related to changes in the market demand or economic conditions of the offtaker. |
| Change in law |
A change in law may have an impact on either party, depending on its content. The parties may mitigate the risk by including in a corporate PPA:
|
| Increase / reduction of benefits | An increase in benefits favours the buyer while a reduction in benefits favours the seller. This risk generally does not affect PPAs signed with private counterparties, but where the reduction of benefits is caused by a change in law, this may be covered by a change in law clause. |
| Market liberalisation (if applicable) | In Greece the electric market is liberalized. |
| Credit risk | Given the early stages of a Greek PPA legal framework, we can only assume that depending on the financial situation of the parties, one party may wish to seek performance security from a party with lower creditworthiness. As such, the risk is balanced against the party expecting payment. |
| Imbalance power risk |
Depending on the PPA structure, the imbalance risk for a physical PPA can be with either the seller or the corporate buyer. It is common for an appropriate third party (such as a utility or wholesale market trader) to step in and manage the risk. |
| Production profile risk | Offtaker or generator, depending on the PPA structure. |
| Type of risk | Details |
| Volume risk | In our experience, Irish cPPAs operate on a pay as produce basis (subject to requirements regarding project availability) meaning that the corporate offtaker bears the risk. But this risk is usually balanced through arrangements with an electricity supplier which may then cover any shortfall. |
| Change in law | The cPPA will usually include change in law provisions, as this will usually prevent the cPPA from being frustrated in the event of a significant change in law. The change in law clause seeks to rebalance the original economic intentions of the parties. Often if the parties cannot agree, the changes to the cPPA following a change in law will be determined by an expert. |
| Increase / reduction of benefits | Given the private nature of contracts, it’s difficult to generalise on this across the Irish market, but where the reduction of benefits is caused by a change in law, this may be addressed by means of the change in law clause. |
| Market liberalisation (if applicable) | The Irish electricity market was liberalised progressively following the Electricity Regulation Act 1999. As such, this is not a risk for cPPA parties. |
| Credit risk | Given the private nature of contracts, it’s difficult to generalise on this across the Irish market. But, depending on the relative strength of the parties, one party may wish to seek performance security from a party with lower creditworthiness. As low creditworthiness most strongly affects the party obliged to pay, the risk is balanced against the party expecting payment. |
| Imbalance power risk | Under the Trading and Settlement Code, all generators are balance responsible, however, there are mechanisms that can be used to transfer this responsibility to third parties. In particular, renewable generators typically appoint the licensed supplier which buys the physical output under a PPA as intermediary. The intermediary appointment allows the supplier to receive payment for the power when sold into the SEM. But it also has the effect of transferring balance responsibility to that supplier. Further mechanisms that can be used to transfer balance responsibility include settlement reallocation agreements under the Trading and Settlement Code which are often coupled with appropriate contractual arrangements and can be used to transfer balancing risk including to third-party traders. In our experience, for physical PPAs balancing risk is generally transferred to a supplier or third party with a trading capability who is better placed to manage these risks than either the generator or corporate offtaker. |
| Production profile risk | The consumption profile is usually more stable than the production profile. Usually this risk is allocated to the buyer under a cPPA and the buyer acquires any missing volume from its electricity supplier at market prices. |
| Type of risk | Details |
| Volume risk | Volume risk is generally borne by the seller. The parties may mitigate such risk by including in a corporate PPA a take-or-pay clause, so that risks related to changes in the market demand or economic conditions of the offtaker may be eliminated. |
| Change in law |
A change in the law may favour any of the parties, depending on its nature. The parties may mitigate such rick by including in a corporate PPA: (i) a liability cap in favour of the weaker party of the contracts; (ii) a provision by operation of which the change in law risk is borne 100% by the producer on the first year of the term and 100% by the offtaker in the last year of the term; or (iii) a provision referring the matter to a technical expert in order to maintain a contractual balance of the undertakings. |
| Increase / reduction of benefits | An increase in benefits favours the buyer. A reduction in benefits favours the seller. This risk generally does not affect PPAs signed with private counterparties. |
| Market liberalisation (if applicable) | Market liberalisation benefits the buyer. |
| Credit risk | Credit risk is generally borne by the seller. The producer may mitigate such risk by signing a corporate PPA with a jointly-liable energy-demand aggregator (e.g. industrial clusters). |
| Imbalance power risk |
Depending on how the PPA is set up, the imbalance risk for a physical PPA can sit with either the seller or the corporate buyer. It is common to pay an appropriate third party (such as a utility or wholesale market trader) to manage the risk. Alternatively, a large enough developer may have access to balancing tools within its wider group and hence offer to manage this risk (i.e. not outsource to a third party). |
| Production profile risk |
Depending on how the PPA is set up:
|
| Type of risk | Details |
| Volume risk | Corporate PPAs in Kenya do not currently have a prescribed form, such that a number of these risks can be negotiated on a commercial basis. |
| Change in law | Unknown – in traditional PPA would sit with offtaker. |
| Increase / reduction of benefits | N/A as benefits are not readily available. In a traditional PPA, where a change in law or change in tax would result in an increase/reduction in costs, this typically results in an adjustment to the tariff. |
| Market liberalisation (if applicable) | Unknown – in a traditional PPA would sit with offtaker. |
| Credit risk | Unknown – in a traditional PPA would sit with IPP. |
| Imbalance power risk | Unknown – in a traditional PPA would sit with offtaker. |
| Production profile risk | Unknown and also not covered by traditional PPAs. |
| Type of risk | Details |
| Volume risk | There is no volume risk. Consumers maintain their supply contract with the CFE utility. If the renewable supply is short, the supply from the CFE utility kicks in, at the CFE standard rates. |
| Change in law | Equally balanced |
| Increase / reduction of benefits | Equally balanced |
| Market liberalisation (if applicable) | Equally balanced |
| Credit risk | The generator assumes the credit risk. |
| Imbalance power risk | Equally balanced |
| Production profile risk | Equally balanced |
| Type of risk | Details |
| Volume risk | Generator |
| Change in law | Usually the change in law is qualified as force majeure event. |
| Increase / reduction of benefits | Generator |
| Market liberalisation (if applicable) | Not applicable |
| Credit risk | Generator |
| Imbalance power risk | Generator |
| Production profile risk | Generator |
| Type of risk | Details |
| Volume risk |
Offtaker. It is usually expected that the off-taker shall pay for what has been produced, therefore permitting that the project company meets its capital costs (debt service, return of equity and fixed operating costs). |
| Change in law |
National utility company if it is the Offtaker/Government. The government usually takes responsibility for the risk of change in law, and in some circumstances, considers it a political risk. To some extent and subject to the government’s approval, the project company may negotiate protection against the change in law, namely a stabilisation clause, which provides that changes in law shall only apply to the project if such change results in a benefit to the project. |
| Increase / reduction of benefits | Offtaker |
| Market liberalisation (if applicable) | Offtaker |
| Credit risk | Offtaker |
| Imbalance power risk | Offtaker |
| Production profile risk | Offtaker |
| Type of risk | Details |
| Volume risk | There is no market standard structure currently in place for this type of commercial arrangement in the Netherlands. Apart from this the risk allocation will be heavily dependant on the specific facts that underly the specific issue on the basis of which a risk allocation would need to be made. |
| Change in law | As above |
| Increase / reduction of benefits | As above |
| Market liberalisation (if applicable) | As above |
| Credit risk | As above |
| Imbalance power risk | As above |
| Production profile risk | As above |
| Type of risk | Details |
| Volume risk | Offtaker. |
| Change in law | Offtaker or shared. |
| Increase / reduction of benefits | Offtaker. |
| Market liberalisation (if applicable) | Offtaker or shared. |
| Credit risk | Offtaker. |
| Imbalance power risk | Offtaker or shared. |
| Production profile risk | Generator. |
| Type of risk | Details |
| Volume risk | Developer/producer |
| Change in law | Offtaker |
| Increase / reduction of benefits | Offtaker |
| Market liberalisation (if applicable) | Not applicable |
| Credit risk | Developer/producer |
| Imbalance power risk | Developer/producer |
| Production profile risk | Developer/producer |
| Type of risk | Details |
| Volume risk |
In general terms, local PPAs usually assign risks in an equitable manner. As PPAs are freely agreed between parties, these tend to assign risks to the party best suited to mitigate them. Having said this, volume risk is usually allocated with customers, as they are the ones demanding the service. |
| Change in law |
Changes in law are commonly and partially absorbed by generators through energy prices. |
| Increase / reduction of benefits |
The increase or reduction of benefits is usually borne by distribution companies and final customers (due to regulatory limitations rather than by standard PPA terms and conditions). |
| Market liberalisation (if applicable) |
Not applicable |
| Credit risk |
Generators |
| Imbalance power risk |
Generators and suppliers |
| Production profile risk | Generators |
| Type of risk | Details |
| Volume risk | In this respect, the design of the risk depends on the will of the parties. If the PPA is designed on the basis of a fixed volume of electricity production, the risk is borne by the generator. Conversely, in a pay-as-produced PPA, the risk is borne by the offtaker, but this risk can be offset using a sleeving contract with the electricity supplier, who can then deal with any deviations. |
| Change in law | One of the key provisions of the cPPAs, due to their long-term nature, is in fact the change of law clause, market disruptions and taxes. |
| Increase / reduction of benefits | This situation is usually covered by a change of law clause. |
| Market liberalisation (if applicable) |
Not applicable, market is already liberalized. |
| Credit risk | Standard requirement limiting the number of potential counterparties to major entities. |
| Imbalance power risk |
Actual generation and offtake will almost always be incompatible. These temporary shortages or surpluses of energy should be balanced (commercial balancing). In Poland, this is done by one of the parties (if it has a status of BRP) or by appointed BRP (trading company) which carries out settlements on behalf of the contracting parties. |
| Production profile risk |
As the production of energy from renewable sources is variable and the volume of energy produced by a generating source and the volume consumed by an energy-consuming company may not match, the imbalance needs to be secured by BRP. |
| Type of risk | Details |
| Volume risk | Traditionally balanced in favor of generators, as PPAs refer to contracted volumes that are generator forecasted percentages of each project’s expected production. |
| Change in law | Traditionally negotiated to be shared in good faith between generators and offtakers. In some situations, the concept of market change in law is included in PPAs to address and allocate / share the risk arising from changes to electricity market price. |
| Increase / reduction of benefits | Traditionally negotiated to be shared in good faith between generators and offtakers. Provisions excluding changes to special taxes/levies, fluctuation of market prices and compensation fees from the concept of change in law are usually included in PPAs. |
| Market liberalisation (if applicable) | Not specifically addressed in the context of PPAs, given the market structure in the country. |
| Credit risk | Security for offtakers’ payment obligations is traditionally negotiated and agreed in the context of PPAs, thus balancing credit risk in favor of generators. |
| Imbalance power risk | Negotiated to be shared in good faith between generators and offtakers. In some situations, the concept of market change in law is included in PPAs to address and allocate / share the imbalance power risk. |
| Production profile risk | In cPPAs, the risk is usually allocated to the buyer, which acquires missing volume from the market. In other cases, third parties may provide the missing electricity, thus managing this risk. |
| Type of risk | Details |
| Volume risk | So far, Senegal has only used the pay or take model in its PPAs. For this particular type of PPA, the risk is taken by the offtaker, which is Senelec as it undertakes to purchase all of the delivered and undelivered energy deriving from the plant. |
| Change in law | The PPAs we have reviewed do not include provisions relating to the change of law, but if there was the case the risk would be taken by the government through its public entity Senelec. |
| Increase / reduction of benefits | As we already mentioned, in case of reduction of benefits caused by a change of law, the risk would be taken by the government through its public entity Senelec. |
| Market liberalisation (if applicable) | With the liberalization of the electricity sector, this risk does not exist. |
| Credit risk | The credit risk is supported by Senelec as the offtaker. The state gives its sovereign guarantee to covers Senelec’s obligations regarding the PPA. |
| Imbalance power risk | To be confirmed. |
| Production profile risk | To be confirmed. |
| Type of risk | Details |
| Volume risk | Where a CPPA is based on fixed volume terms, the generator generally bears the risk. Conversely, where an offtaker agrees to purchase whatever energy is produced under the CPPA, the offtaker bears the risk. |
| Change in law | The CPPA will usually include a change in law provision to ensure that the parties are rebalanced to reflect their original economic intentions. In our experience, this risk often sits with the offtaker (particularly where the change in law results in an increased cost etc). |
| Increase / reduction of benefits | Given the private nature of contracts, it is difficult to generalise on this across the South African market. However, where the reduction of benefits is caused by a change in law, these may be covered by the change in law clause (see above) and borne by the offtaker. |
| Market liberalisation (if applicable) | Given the private nature of contracts and the subjective nature of the application of this on contracting parties, it is difficult to generalise on this across the South African market. In our experience, this is likely to be dealt with as a change in law event (see above, as the liberalisation is likely to involve regulatory reform) or can specifically be allocated to the offtaker or generator (and may find application as a result of an effect of the market liberalisation). |
| Credit risk | Given the private nature of contracts and the subjective nature of the credit worthiness of contracting parties, it is difficult to generalise on this across the South African market. The offtaker under the CPPA may be required to provide credit support (a parent company guarantee, letter of credit etc) to mitigate payment risk, which is ultimately dependent on the credit worthiness of the offtaker and/or may be driven by the requirements of the financiers of the project/facility. |
| Imbalance power risk | This is likely to be a risk for the offtaker in South Africa as the offtaker is often forced (under structures typically in use in South Africa, see above) to procure any required power in excess of that generated by the IPP from the utility (see above) and Eskom manages this risk, as balancing authority (see below). |
| Production profile risk | In our experience, it is often the buyer who bears this risk, as it may be forced (under structures in use in South Africa, see above) to procure any required power in excess of that generated by the IPP from the utility (see above and below). |
| Type of risk | Details |
| Volume risk | Where a PPA is based on “as consumed” structure, the producer bears the risk (such risk is reduced with the possibility to sell the surplus to the market). Conversely, with an “as generated” PPA, the offtaker bears the risk (but this risk may be balanced through the use of a sleeving agreement with an electricity supplier which may then cover any shortfall). |
| Change in law | The PPA will usually include change in law provisions, as this will usually prevent the PPA from being frustrated in the event of a significant change in law. This clause generally applies to both parties. |
| Increase / reduction of benefits | Given the private nature of contracts, it is difficult to generalize on this across the Spanish market, but where the reduction of benefits is caused by a change in law, this may be covered by a change in law clause. |
| Market liberalisation (if applicable) | In Spain the electric market is liberalized. |
| Credit risk | Generally, in favor of the producer/seller. |
| Imbalance power risk | Balancing is performed by the system operator, Red Eléctrica de España (REE). REE organizes and coordinates a market in which power plants compete to offer the operation reserve service (secondary reserve) and also an additional tertiary reserve market. Secondary reserve is remunerated by means of market mechanisms via two concepts: availability (control band) and usage (energy). It is equivalent to the European product known as aFRR – automatic Frequency Restoration Reserves. Tertiary reserve is an optional service managed and remunerated by market mechanisms. |
| Production profile risk | The consumption profile is usually more stable than the production profile. Usually, this risk is allocated to the buyer under a cPPA and the buyer acquires any missing volume from the market. Under the cPPA, a third party may also take responsibility for providing the missing electricity to manage this risk. |
| Type of risk | Details |
| Volume risk |
Where a PPA is based on fixed volume, the producer bears the risk. Conversely, with a pay-as-produced PPA, the off-taker takes this risk. However, we would expect this risk to be balanced through the use of a sleeving agreement with an electricity supplier which may then cover any shortfall. |
| Change in law | The PPA will usually include change in law provisions, as this will usually prevent the PPA from being frustrated in the event of a significant change in law. The risk of such a change in law is balanced against the party receiving the GoOs or renewable benefit, however a change in law clause seeks to rebalance the original economic intentions of the parties. In recent years offtakers have increased the focus on change of law clauses and terms in this respect have tightened from the vantage point of producers. |
| Increase / reduction of benefits |
There is no set rule with regards to allocation of this risk. We often see the value of benefits included in the general contract price for electricity. Accordingly, in this case, the risk of a reduction in benefits would be borne by the offtaker (subject to change in law provisions). Whether the agreement will concern the sale of future benefits is a point for negotiation with no standard allocation of risk. |
| Market liberalisation (if applicable) | This is not a risk in the Swedish market which is liberalized. |
| Credit risk | Credit risk is almost always mitigated with the inclusion of credit support documentation, often provided by both parties. |
| Imbalance power risk | The PPA will allocate this risk, often in exchange for a defined fee. In the absence of specific allocation the liability would remain with the generator. |
| Production profile risk | The consumption profile is usually more stable than the production profile. Usually this risk is allocated to the buyer under a CPPA and the buyer acquires any missing volume from the market. Under the CPPA, a third party may also take responsibility for providing the missing electricity in order to manage this risk. |
| Type of risk | Details |
| Volume risk | It is the generator that assumes the volume risk. In fact, each PPA determines in advance the volume of electricity and also caps the excess energy, which STEG commits to purchase or transport. |
| Change in law |
Within the framework of the PPA relating to the sale to STEG of electricity produced from renewable energies subject to an authorization, the risk of change in the law is assumed by the two parties to the contract. In the event that a change in the law affects the viability of the project in a substantial way that disrupts the scheme of the contract, the producer must notify the Minister in charge of energy, and both parties must make every effort to obtain an exemption from the effects of the change in the law. (Article 16 of the standard contract approved by the aforementioned order of February 9, 2017). In the framework of the PPA concerning the sale to STEG of the surplus of electric energy produced from renewable energies for self-consumption, the risk of change in the law is assumed by the two parties since any modification applies to the contract from the date of its coming into force. (Article 18 of the standard contract approved by the aforementioned order of February 9, 2017) |
| Increase / reduction of benefits | There is no general rule applicable in this matter. Nevertheless, in the case of unscheduled interruption of the evacuation of electrical energy by STEG beyond a period fixed by the parties to the contract, the energy generator is entitled to request payment for the Energy not removed. |
| Market liberalisation (if applicable) | This risk does not exist in Tunisia. For the moment, only the production of energy is liberated in Tunisia. |
| Credit risk |
In general, the credit risk is assumed by the producer. As such, under the contract of sale of electricity produced from renewable energy, the failure by the producer to some of its obligations, including financial obligations, is supported by it and not by STEG. To remedy this, a "Direct Agreement" is created between STEG, the Producer and financial institutions, through which these institutions compensate for the failures of the Producer, and in some cases replace it. (Article 22 of the contract approved by the aforementioned order of August 30, 2018). |
| Imbalance power risk | This risk, although minimal, is assumed by the Power Producer, as most PPAs are standard contracts determined by the Ministry of Energy, which lays down the important provisions (eg transfer price of the energy transferred, volume, conditions for termination of the contract). |
| Production profile risk |
The consumption profile is usually more stable than the production profile. The risk of overproduction is assumed by the producer, since the maximum volume of energy, or the excess volume of energy transferred to STEG is capped. |
Not applicable.
| Type of risk | Details |
| Volume risk | Generally with the generator |
| Change in law | Balanced |
| Increase / reduction of benefits | Balanced |
| Market liberalisation (if applicable) | Balanced |
| Credit risk | Generator |
| Imbalance power risk | Not applicable |
| Production profile risk | Generator |
| Type of risk | Details |
| Volume risk | Where a PPA is based on a fixed volume delivery to the offtaker, the generator bears the risk. With a pay-as-produced PPA, the offtaker bears the risk, however, this may be mitigated through the use of a sleeving agreement with an electricity supplier which may then cover any shortfall. |
| Change in law | The PPA will usually include change in law provisions, as this will usually prevent the PPA from being frustrated in the event of a significant legislative or network code change or court judgment. The risk of such a change in law is balanced against the party receiving the GoOs or renewable benefit, however, a change in law clause seeks to reopen the agreement in order to rebalance the original economic intentions of the parties. |
| Increase / reduction of benefits | Given the private nature of contracts, it is difficult to generalise on this across GB market, however, where the reduction of benefits is caused by a change in law, this may be covered by a change in law clause. |
| Market liberalisation (if applicable) | GB liberalised its electricity market through the Electricity Act 1989. As such, this is not a risk for cPPA parties. |
| Credit risk | Given the private nature of contracts, it is difficult to generalise on this across GB market, however depending on the relative strength of the parties, one party may wish to seek performance security from a party with lower creditworthiness. As low creditworthiness most strongly affects the party obliged to pay, the risk is balanced against the party expecting payment. |
| Imbalance power risk | Balancing in GB is done by Elexon in accordance with the Balancing and Settlement Code (BSC). There is, however, no restriction on either party to a cPPA acting as balancing party. As the costs of balancing energy following under or over delivery may be high and may, therefore, significantly increase the costs of the party bearing that risk, a party which is better placed to bear this risk should be selected. This may be the case if, for example, it has existing energy sources which can be used for correcting the imbalance in its portfolio. |
| Production profile risk | The consumption profile is usually more stable than the production profile. Usually this risk is allocated to the offtaker under a cPPA and the offtaker acquires any missing volume from the market. Under the cPPA, a third party may also take responsibility for providing the missing electricity in order to manage this risk. |
| Type of risk | Details |
| Volume risk | The offtaker typically receives some compensation for a consistent and material shortfall in performance. |
| Change in law | Agreements vary. The generator sometimes gets some risk-sharing or other protection for changes in law. |
| Increase / reduction of benefits | Neither party. Incentives or benefits such as tax credits or RECs are typically allocated to a specific party and any changes impact only the designated party. |
| Market liberalisation (if applicable) | Not applicable. |
| Credit risk | Each party bears credit risk as to the other party. For this reason, credit support or creditworthiness requirements typically apply. |
| Imbalance power risk | Varies by transaction type and delivery point. |
| Production profile risk | Buyer. |
| Type of risk | Details |
| Volume risk | Where a PPA is based on fixed volume, the producer bears the risk. Conversely, with a pay-as-produced PPA, the offtaker bears the risk – however, this risk may be balanced through the use of a sleeving agreement with an electricity supplier which may then cover any shortfall. |
| Change in law | The PPA will usually include change in law provisions, as this will usually prevent the PPA from being frustrated in the event of a significant change in law. The risk of such a change in law is balanced against the party receiving the GoOs or renewable benefit. However, a change in law clause seeks to rebalance the original economic intentions of the parties. |
| Increase / reduction of benefits | Given the private nature of contracts, it’s difficult to generalize on this. However, where the reduction of benefits is caused by a change in law, this may be covered by a change in law clause. |
| Market liberalisation (if applicable) | |
| Credit risk | Given the private nature of contracts, it’s difficult to generalize on this. However, depending on the relative strength of the parties, one party may wish to seek performance security from a party with lower creditworthiness. As low creditworthiness most strongly affects the party obliged to pay, the risk is balanced against the party expecting payment. |
| Imbalance power risk | This is likely to be a risk for the corporate buyer as the buyer is often forced (under structures typically in use in Zimbabwe, see above) to procure any required power in excess of that generated by the IPP from the utility (see above). |
| Production profile risk | In our experience, it’s often the buyer who bears this risk, as it may be forced (under structures in use in Zimbabwe, see above) to procure any required power in excess of that generated by the IPP from the utility. |
Angola
To what extent are corporate PPAs presently deployed and what sort of structure do they take?
Corporate PPAs remain uncommon in Angola.
Article 48 of the Electricity General Law provides that outside the scope of the public electric system, the conditions of sale of electric energy will be established by the parties.
Article 15 of the Executive Decree No. 122/19 of May 24 (electric energy sales tariffs) provides special arrangements for the sale of electricity by means of special or bilateral contracts between producers and distributors and those with final customers, under the terms set out in the Tariff Regulations (Presidential Decree No. 4/11 of January 6) shall be authorized by an order of the Minister of Energy and Waters, after hearing the regulatory authority.
All the contracts with National Transportation Network ("RNT" as a sole buyer must comply with certain requirements specified in Article 11 of the Presidential Decree No. 4/11 of January 6 as amended by Article 11 of the Presidential Decree 178/20 of June 25, in order to their prices are allocated to tariffs.
Do the country's regulators allow corporate owners to purchase (1) directly from a facility, or (2) from a choice of suppliers?
In accordance with Article 11 of the General Electricity Law, the use of the facilities and networks that incorporate the Public Electricity System is allowed under the conditions provided for in the aforementioned regulation or agreed between the interested parties and their holders, as long as the supervisory body approves it after prior validation by the regulatory authority.
Hence, corporate owners are allowed to purchase directly from a facility or a choice of suppliers, as long as it has been approved by the supervisory body and has effectively gone through a prior validation from the regulatory authority.
Other than the generator and the off-taker, are any third parties commonly party to the PPA structure (e.g. a utility or other market agent)?
In addition to the electrical energy provided by the Company ENDE E.P (National Electricity Distribution Company) that comes from hydraulic dams and private generators, so far, there are no other third parties as a common party to the cPPA structure.
Is a generator permitted to sell electricity directly to an end user? If so, do they require a licence or other form of authorization?
As previously stated, Article 48 of the Electricity General Law provides that outside the scope of the public electric system, the conditions of sale of electric energy will be established by the parties.
Angola
What are some of the technical, political, financial or regulatory challenges to corporations adopting green energy in the short/medium term in your country and how have these challenges been overcome (or how can they be overcome)?
More incentives and benefits need to be created for companies that want to implement green energy systems. Facilitating the process of importing and accessing currencies to pay for equipment to implement the projects related to renewable energy is necessary. Governments should create incentives for companies that are implemented across the country, thereby creating employment and facilitating greater acceptance of new technologies in rural areas.
Angola
Are there any anticipated regulatory changes which will alter the regulatory landscape for corporate green energy and corporate PPAs?
International development partners are providing technical support to the Angolan government to establish a regulatory framework which includes negotiating power purchase agreements with independent power producers (IPPs) and design of a feed-in-tariff scheme for renewables.
Angola
What is the corporate appetite for green energy, including any political or financial incentives available to corporates to adopt green energy?
Even though national and international companies have been showing interest to develop green energy structures in Angola, this is still something that has to be well studied and thought through it. However, there are already small dimensions of solar energy structures being developed, for example, but only for particular purposes.
What are the key local advantages of the corporate PPA model which can benefit our clients?
The key local advantage of the corporate PPA model in Angola is energy security and easier access to financing having the corporate PPA as collateral.
What subsidies are applicable to the generation and sale of renewable energy?
This information has not been made public.
Does your country implement a national support scheme with tradable green certificates (such as guarantees of origins)?
Not yet, as green energy has not yet been implemented.
Angola
To the extent corporate PPAs are deployed, how are prices, terms and risks affected?
| Topic | Details |
| Do prices tend to be floating or fixed? |
According to Article 26 of the Presidential Decree 178/20 of June 25, the tariff structure is applied by the RNT concessionaire and by the distribution companies to users connected to their networks. Along these lines, this same diploma, on its article 27, establishes that the tariff structure reflects the costs to which users give rise, according to the characteristics of consumption and the level of tension to which they are connected, regardless of their social or legal character and the final destination give to the energy consumed. Hence, the prices are fixed considering the elements above mentioned. |
| What term is typically agreed for the PPAs? | There is not a fixed-term for cPPAs it all depends on the activity to be exercised. However, it is important to mention that the tariff regime is, in general terms, in force in a four-year tariff regime. Alongside with that, the tariff period is defined by a specific diploma by the Sector Regulatory Entity, which must be multiannual, as established on Article 28-A of the Presidential Decree 178/20 of June 25. |
| Are the PPAs take-or-pay or limited volume? | Not applicable |
| Are there any other typical risks? | Not applicable |
To the extent corporate PPAs are deployed, in whose favour will the risks typically be balanced?
| Type of risk | Details |
| Volume risk | The risk is born by those who not comply with rule applicable to the specific situation. |
| Change in law | Usually, when changing legislation, users and distributors are given a period to prepare and adapt to this mentioned change of legislation. Hence, when there is a change in law non complied with, the risk is born by those who have not complied with the rule in place. |
| Increase / reduction of benefits | Again, similar to the change in law, the risk is born by those who not comply with rule applicable to the specific situation. |
| Market liberalisation (if applicable) | Not applicable |
| Credit risk | The risk is born by those who not comply with rule applicable to the specific situation. |
| Imbalance power risk | The risk is born by those who not comply with rule applicable to the specific situation. |
| Production profile risk | The risk is born by those who not comply with rule applicable to the specific situation. |
Angola
Does your country operate a balancing responsibility scheme?
Not applicable.
If your country operates a balancing responsibility scheme, who is the balancing authority and do the generator and offtaker typically undertake balancing themselves?
Not applicable.
Angola
What significant transactions/deals have taken place in the last 12-18 months?
Laúca Hydroelectric Power Plant
According to the Government, Laúca Hydroelectric Power Plant (“AH Laúca”) is the largest work in the country today. The Project was commissioned by the Angolan Executive, represented by the Ministry of Energy and Water, and is carried out by ODEBRECHT. COBA and LA MAYER carry out the supervision of the implementation of the project. When AH Laúca is 100% operational, it will produce more than twice as much energy as the other two dams already operating on the Kwanza River. This energy potential will serve 8 million people. AH Laúca will produce 8,643 GWh (gigawatts) of electricity, representing an installed capacity of 2,070 MW (megawatts).
The realization of the project demands great infrastructure support. Because of this, AH Laúca is today a city that is composed by: Leisure area; Sports area; Accommodations; Kitchen and Cafeterias and Medical Center.
AH Laúca is a pole of job and income generation. The project is also committed to providing opportunities for national talent. Today, the enterprise has 8,458 Members. Of these, 8,035 are national, which represents 95% of the entire productive force involved in the execution of the work. The remaining 423 are expatriates, a number that represents 5% of total members.
Through the Acreditar Program, the project offers basic and specific training to AH Laúca Members and also to the residents of the communities surrounding the construction site.
AH Laúca is 86% ahead of Civil Works, 72% ahead of Electromechanical Assembly and 14% in the Energy Transport System. Always overcoming challenges and fulfilling all the goals set with safety, quality and productivity.
2nd Hydroelectric Power Plant of Cambambe and Dam Alignment
With the conclusion of the Cambambe 2nd Power Station and the Dam Raising, it was possible to obtain an additional power of 780MW. This power is helping to reduce the energy supply deficit in the Provinces of Luanda, Kwanza Sul, Malanje, Uige, Kwanza Norte and Bengo.
It will also allow the interconnection of the North-Central Systems with the Benguela Province link, thus reducing production costs and the consumption of diesel for energy production.
More than 10,000 construction posts have been created as part of the temporary work in the rehabilitation, modernization and extension of the hydroelectric complex. The construction owner was GAMEK (Gabinete de Aproveitamento do Médio Kwanza) and the contractor was ODEBRECTH.
Solar village program
The main objective of the Solar Village Programme is electrification, through the installation of autonomous solar photovoltaic systems (isolated) in infrastructures Social, including: Schools; Medical Posts; Police Posts; Administrative Buildings; and, Social Jangos, including Public Lighting Posts.
In the 1st phase of the Programme, awarded to the company Elektra Electricidade e Águas, Lda, 11 localities were selected from 4 Provinces in the country: Bié, Kuando Kubango, Malange and Moxico. This phase has been completed since 2011, with a total of 156,660 Wp of 42 systems and 70 public lighting posts implemented.
In some cases, a system provides electricity to more than one infrastructure. So far, 50 infrastructures have benefited from the electricity supply, namely: 15 schools, 18 medical posts, 1 maternity ward, 1 police station, 1 police station, 9 administrative residences, 1 nurse's residence, 3 administrations.
In the 2nd phase of the Solar Village Programme, four companies were selected for the installation of a total of 75 systems and 160 streetlights.
As part of the 3rd phase of the Solar Village Programme, the project has already started after the Auto de Consignation signed with the Company LTP Energias S.A. The project will benefit the provinces of Kwanza Sul, Cuando Cubango and Lunda Sul, whose aim is to supply electricity to the communities with Solar Photovoltaic Systems of Auto-consumption Kits and Public Photovoltaic Lighting.
It is part of the energy and water sector action plan 2018-2002, to continue the Solar Village Programme and to ensure adequate maintenance of its infrastructure and test a new concept of a 100% solar mini network, based on batteries, to electrify the most isolated municipality headquarters, avoiding fuel logistics.
What transactions/deals are anticipated to come to market in the next 12-18 months?
See Past transactions.
Angola
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