What is a proxy storage power purchase agreement (PPA)?

We propose a contractual setup, the proxy storage power purchase agreement (PPA), to foster the deployment of energy storage technologies. We define a threshold price below which the PPA becomes financially attractive for PPA buyers. We compute the threshold price for several storage technologies and configurations, in seven European countries.

What is a PPA for new energy storage resources?

Some PPAs for new energy storage resources have been structured as capacity-only contracts in which the developer is responsible for the sale of energy and all costs associated therewith—including the costs of the required energy procured from the utility.

Does a power purchase agreement contain a lease?

The use of Power Purchase Agreements (PPA) in the supply of renewable energy is on the rise. Typically, the customer in a renewable wind and solar PPA does not have the right to control the underlying equipment and, therefore, such an arrangement does not contain a lease.

What are the cash flows of proxy storage PPAs?

From the energy buyer perspective, the cash flows of proxy storage PPAs are based on the revenues of the optimal operation of a virtual energy storage technology (with predefined characteristics) on the day-ahead market.

How are energy contracts similar to proxy storage PPAs?

Energy contracts are similar to proxy storage PPAs because they are only based on day-ahead market revenues and the seller is responsible for the operation of the storage asset. However, the revenues of energy contracts are based on the actual operation of the asset and perfect foresight does not apply.

Are 24/7 clean power purchase agreements a good idea?

Though 24/7 clean power purchase agreements are gaining global momentum and could drive the deployment of storage and flexible generation assets, they require power suppliers to develop new capabilities.