Help CenterPexapark’s PPA model calculates the value of wind and solar PPAs in ERCOT and PJM, based on forward curves, net load scenarios, and real prices gathered through polling.
To calculate PPA value, we multiply the expected hourly price of electricity by the expected hourly generation of the relevant facility over the lifetime of the contract, as depicted below. We then calibrate the outputs against offtaker and seller pricing behavior as collecting from our polls.
For a description of how we calculate expected hourly prices, see here.
To get the expected hourly generation of the relevant facility, we start with the facility’s shape, which describes how much and when it is expected to generate. Because a facility’s actual hourly generation can vary materially from its expected hourly generation, we consider the risk of over or under delivering to expectations. To quantify that risk, we look at actual, historical generation data from ERCOT and PJM to calculate and compare that to P50 generation profiles in order to understand shape risk and adjust PPA values accordingly. Finally, we adjust the shape for economic curtailment risk at the delivery point or factor in common ways parties choose to mitigate that risk.
The result is an objective estimate of the PPA’s value. We then compare that value to the average offer and bid price from our polling, adjusting the model to ensure its outputs represent market consensus.